Welcome everybody, and thank you for taking the time to join the SÜSS MicroTec earnings call for the first nine months. It's my pleasure to share results with you, give you an update and impressions on where we see the business today. As far as we can tell at this point, also give you an outlook for the rest of the year, but also for next year. At a glance, we've had what I think is somewhere between a good and a very good quarter. Of course, the headline is order entry, which was large enough that we had to ad hoc publish it at the beginning of October. It is the first quarter in the company's history that we have received orders of more than EUR 100 million.
That's, I mean, that's a big achievement in my view. It reflects a number of things. It reflects a continuously strong demand for our solutions. I think that's maybe not a surprise. That's consistent with the industry, which is going at least in the you know this year and for the foreseeable time probably as well going from strength to strength. At the same time, I think it's also clear, and you'll see this in one of the next slides, that order entry varies from quarter- to- quarter. I pointed that out three months ago when order entry was not as high as I might have hoped at that time. Now it is higher than we all expected.
This does not mean we will have EUR 100 million order entry in every quarter going down the road, for sure. At the same time, if I look at what's behind the EUR 100 million, there is enough of what I would call indicators for sustained growth that this leads me to be quite optimistic, not just for the rest of this year, but also for next year and the time beyond. Growth drivers are largely unchanged in lithography. I think the EUV demand and the associated demand for photomask cleaning equipment that then comes from us. Most of you will be aware that the EUV lithography come mostly from ASML. Associated with that is usually a demand for mask cleaning equipment, which usually comes from us. That demand has indeed picked up.
I think that's something that we appreciate, something that we also see as not just a fluke. We do see there is a strengthening demand in that space. The main growth driver for MicroOptics is automotive. I think that's also something that's not specific to this one quarter. That's something that we believe is sustained and will be a significant growth driver for the company as well going forward. Revenue is also up, obviously not quite as much as order entry. For the nine months, we are just shy of EUR 190 million. That's a little over 8% more than last year. That's quite positive. Same is true for the EBIT margin, of course, also for the EBIT in million euros.
That's something that we had set ourselves as a target for the year, that we would have a meaningfully higher EBIT margin than last year. It looks like we're well on track for that. You may remember the guidance, 9%-11% for the year. We are now at 9.4%. We are, if you look at our revenue guidance, expecting a strong fourth quarter. Should be the quarter with the most revenue in the year. This is not just consistent with that guidance, but I would say it's well in line with that guidance. Two events happened or two things that I want to share with the group. We did sign a partnership with SET. SET is a company we've known for a very long time.
Somebody active in the bonding and more recently hybrid bonding space. The partnership will allow us to offer to customers a fully automatic die-to-wafer hybrid bonding solution. Together the wafer-to-wafer hybrid bonding solution that we have already developed that's currently being qualified, we will have a comprehensive suite of hybrid bonding solutions that we can offer to customers which we believe is necessary to be successful in that space. The other thing is, it's more of a reputational thing, but actually quite meaningful. Our subsidiary in Switzerland, SÜSS MicroOptics, has won the 2021 Swiss Manufacturing Award. Now, for those of you who may not be familiar with the Swiss space, this thing is given by University of St. Gallen.
Gallen, which is a pretty well-known place in Switzerland, and it's given to one company each year for innovation in manufacturing in Switzerland. This is quite a big deal for our colleagues there. My congratulations went out to them when they got it in October, and I want to repeat that here. I think this is something that reflects the quality of our colleagues. It reflects the passion and the drive that they have built with comparatively few resources in the past in Switzerland to drive our MicroOptics business forward. Positive business outlook for the fourth quarter. Yes, I mentioned this at the outset. It's certainly true. We believe we're gonna have a strong fourth quarter.
We are confirming our guidance. I'll show this at the very end, in spite of some challenge that we have. Before I look at the numbers, I think it's worth pointing out that if you look at the overall situation, not just in the economy, but in societies, COVID obviously has not gone away. I mean, far from it. Supply chain challenges abound. Now our supply chain, of course, is different from, let's say, that of a car maker, but it is extremely global and very complex. In that sense, it is to some extent comparable. One question I've been asked, in the past weeks and months is to what extent we are subject to that.
The answer is, yes, we see it, we feel it, and it is causing a fair amount of extra work, to put it mildly. I mean, people are working long hours to compensate for the impact because what we want to be able to achieve, and for the very most part have been able to achieve, is that we deliver tools to our customers when they need them, when they expect them, regardless of whatever challenges and hurdles we have to overcome to do so. That simply means extra work. Sometimes it's trivial parts, small, relatively low-tech parts that have been available for many years without ever there being a hitch, and now suddenly there's a problem. You can find another part, but you have to do some level of construction to introduce it and integrate it into the product.
It's not, these parts are not plug-and-play. Do some qualification, some testing. That is the extra work I refer to that our colleagues do and have been doing. That, in a nutshell, has allowed us to deliver revenue in this quarter more or less, or very close to our own internal expectations, upfront. That, I think, to me as a CEO is probably as meaningful, maybe even more meaningful in terms of good news as the very high order entry. With that, I would like to go through some numbers. Many of you will have seen these numbers in the quarter report when we published it in the morning. Order entry, obviously very high this quarter, but also very high for the nine months.
If you take the longer view, nine months, the three quarters in the current business year were up by almost 23%. That's a significant increase. If you recall, even last year, the numbers were up significantly over the year before. Our order backlog, I have not actually made the effort to confirm whether it's the highest ever in the history of the company, but if it isn't, it's the highest for a long time. My colleague, Tobias Nottelmann, who is the Head of Controlling, he nods his head, so I think what he's, he has been with the company much longer than me. He says, "Yes, this is the highest order backlog we've ever had." Revenue has also gone up. Has gone up by less.
As I mentioned earlier, if supply chain challenges did not exist, that number would have been a little bit higher, but not tremendously higher. I think overall, this is well within the plan that we have had internally for months in terms of how the revenue should develop, how deliveries, you know, what is the timing for deliveries, and have deliveries actually occurred at the expected time. For the most part, they have. Gross profit has gone up. That, of course, was something that the company had planned for the current year. Now nine months in, we are up by a little over 3 percentage points. That's, I would say, well within the range of what we wanted to accomplish for the year. Of course, for the third quarter, it's even higher.
As you see if you look at Q3 2020, which had relatively little revenue, but of that revenue, a very high share of systems that are high margin, traditionally, just the type of machine. You see that, you know. You look at the nine months last year, it was a different picture. My advice would be, whether it's a great quarter or a not- so great quarter, it always makes sense to look at more than one quarter's figures to judge SÜSS and probably most tool makers in this industry. Just because we have large orders, individual orders can be large. One tool moves its delivery date by a week, it can affect the quarterly numbers.
One can spend a lot of time reading into tea leaves there, but sometimes it's just that something moved in or out by a week here or there, and that's it. If you look at the longer periods, you get, in my view, a slightly more accurate and meaningful picture. Speaking of a better picture, you look at EBIT. EBIT has increased by almost half from EUR 12.2 million to EUR 17.7 million for the nine months. That's a solid increase, 2.4 percentage points. And again, even though our revenue for the nine months, if you were to take a very simplistic view, multiply by four, divide by three, you would get a number that's below our guidance.
Now, I've said earlier, we fully intend to hit our guidance, but even if you did, you would have annualized, you know. On an annualized basis, our EBIT is within the guided range, our revenue is not yet. That's a positive sign to me, and it's an indication that we are looking at, in spite of all the challenges we have, we are looking at least good profitability. I think that's how I would put it. I think that's, those are the core points that I want to make of the overall numbers. We'll look at the segments in a moment. I do believe that the margin improvement can be sustained.
I would probably not go quite as far as saying that specific measures we've taken in the last six months or so since I was there already have a meaningful impact. I do think that the awareness and the focus on cost, the awareness on the focus on hitting numbers in terms of revenue, which means making sure deliveries occur as expected. You know, the stringency, I think, of how we look at these, how we manage it, and how we communicate it within the company, I think that's changed, and it's changed for the better. Whether, you know, how much of the EBIT increase or the gross profit increase is that I would not dare to speculate.
Overall, I feel that the company is certainly on the right track and will remain on the right track, which means that going forward, we expect to see the performance improvements that frankly, I came on board for to deliver. Again, if you look at the numbers, you know, top line is up, bottom line is up. No matter if you look at the EBIT, dollars, euros, margin or net results after taxes. Of course, the nice order entry bump that we've received this quarter helps us believe that we will not just grow this year, but we will certainly also grow next year. I'll say a few more words about that at the end. Let's see. Let me go to the next page.
I just wanted to share this order entry over quarters, over a number of quarters with you just so that you see how much this can vary. If you look at this, you know, quarter- to- quarter really is not the way to look at it because, you know, there was a down quarter in terms of order entry in 2019. There was a down quarter in 2020, a dramatic one, by the way. Cut in half from one quarter to the other. There was a down quarter last quarter, which, as I mentioned at the very beginning of the call, at the time, we were not all that happy about.
Now some of the, you know, a couple of orders we thought we would get in Q2, we got in Q3, and then we got some orders we didn't quite expect for Q3. Again, a couple of orders that we fully expected to get, but maybe in October or November, we got them in September. Yes, a couple of orders we were not sure that we would get. I think our success rate in third quarter has also been a little bit higher than what we anticipated. It's always a combination of these things. The other message from this, and I think this is something that I think most of you know, but it's worth reiterating. By far, our main market is Asia, and Asia, of course, means essentially East Asia. This is basically China, Korea, Taiwan, Japan.
Yes, Southeast Asia is included in that figure, but it's very small by comparison. That has been the case for a while now. That will continue to be the case. It reflects overall investment in the semiconductor industry. Maybe not exactly, but directionally, it does reflect it. One key success factor for us as a company is our teams in those countries I mentioned. Their ability to sell, and in the case of Taiwan, also to produce and contribute to developing systems. Let's look at the segments for a few minutes. When you look at this, you see on the order entry side, order entry went up in every segment. The largest increase in percentage for the nine months was in Photomask. Is it the largest? Before I say something wrong, is Photomask.
If you look at the quarter, it's bonder, by the way. You may remember that the order entry for bonder was really not all that great in the first and second quarter. That has really picked up. What's especially meaningful for bonders is that a lot of this order entry that came in the third quarter was for permanent bonders. Permanent bonders, of course, something that we have been meaning to grow, for a while. It's one of the growth levers for the bonder segment. If I go through them, you know, just say a few words about each business unit. Litho, it's lithography, of course, our largest business unit, has two main parts. One is exposure, which is essentially the mask aligner business, and also the scanner business, which, of course, is still small.
The other part is the coater business. Order entry growth comes from both, and I think that's also nice. The coater, especially on the coater side, we had very strong business last year as well. We're very happy that that's continuing. You know, this goes through to the bottom line. Part of it is internal efforts. Part of it is product mix. Maybe I should say the other way around. I think a fair amount of it is product mix. Of course, we are always seeking with each individual negotiation, with each individual contract, we are seeking to manage gross profit in a positive way.
At the same time, I'm probably not saying anything that's new to most of you, especially in the mask aligner coater space, this is not an area where we have no competition. We always have to earn our keep, we have to earn our growth, we have to earn our margin. I'm quite happy that our colleagues have been able to do that. Well, they've been able to do that, of course, always, but they've been able to do more of that this quarter. Photomask equipment, I think that's something that we had been seeing on the horizon and we had been hoping, expecting, and now we're seeing it. We're seeing orders. Yeah, the margin, of course, the margin in last year for Photomask was very high.
The margin in Photomask varies from quarter- to- quarter and even year- to -year, more than in any other business unit. A couple of reasons for that. One, the number of data points, the number of tools that's within that, you know, for the nine months, EUR 33 million of revenue, the number of tools in there is very low. These are big, expensive tools, and of course, there is not too many of them. It really depends from customer- to- customer, what level of customization does a customer need and how much additional revenue are we able to realize for this. This does vary from situation- to- situation. This has been below today's figure, it's been above today's figure, and we expect it to continue to fluctuate in the future.
What we do see is that order entry, and if you look at the orders at hand as well, that has increased significantly. From that, I think it's probably not a wild guess to infer that this will be a business that if you look at revenue, will grow quite a bit next year. I mentioned a few things about bonder. The main thing to me is that if you look at our bonder business, of course, the bonder business has a long history, not all of it positive at SÜSS. It is for me, for us, for the leadership of the company, one of the main growth areas of the company. Right now, a fair amount of the revenue is still not still.
We have revenue in manual bonders and in temporary bonders, where we are quite successful. We are now beginning to see an increase, a sustained increase, I believe, for automated permanent bonders. Of course, in addition to that, the other main growth area for bonders is the hybrid bonding. I mentioned this in the context of the partnership with SET. I said, or rather wrote this in the press release then when we announced the partnership, I believe that, and I may have mentioned it in last quarter's earnings call as well. I believe that in order to be really successful in the hybrid bonding space, anybody who wants to do that needs to be able to offer to a customer an as complete as possible, at least a comprehensive suite of hybrid bonding solutions.
Because at the end of the day, what we see a lot of customers, they don't necessarily know which tool solution they need. They understand very well which problem they have. Specifically, whether a particular problem, a particular application is best served by a die to wafer or by a wafer to wafer, or maybe by a reconstituted wafer to wafer, which is the same as a collective die to wafer solution, that is not necessarily clear up front. If the customer can only talk to us, if they already know that they want one and not the other because we don't offer the other, that's not exactly helpful. For us, it's quite important that we will be able to offer die to wafer, collective die to wafer, which is the same as reconstituted wafer to wafer, and real wafer to wafer.
We will be able to do that. That's an important message, I think, for our customers and of course, for the public as well. Last but not least, and really not least, MicroOptics. Now, MicroOptics, when you look at order entry, order entry and sales are often identical. This particular nine-month period, they are not. But in for a lot of the volume where you especially in the automotive space, where you have a situation where you start with a nomination letter, then eventually you get a forecast, and eventually you get a confirmed forecast, which is a binding forecast, which commits. Well, actually, even earlier, we are usually committed to a certain capacity. Then none of this is, of course, order entry in the account.
In most cases, the order entry comes when the product gets shipped because it gets called off. There are some exceptions, as you see in this year. Last year, there were essentially no exceptions to that. For the most part, the business is order entry date equals revenue date. That's worth bearing in mind. When we look at order backlog, for the very most part, this actually has nothing to do with MicroOptics. The business is growing. That's important. Order entry, but also especially sales. Margin also, we are not quite there yet where we want to be. For me as well, and I've been there. The location, of course, is in Neuchâtel in Switzerland.
I've been there quite a number of times in the last six months, probably almost once a month, really. It's an important part of our growth story as SÜSS. I think we have a team there. We have USPs there. We have been able to accomplish something that's above and beyond what competitors can offer to customers at this time. I want to leverage this and realize that potential, and we will do that. Overall, if you look at this, you know, we have four business units that are somewhat disparate. Sometimes you have a quarterly report, you say, "Well, one or two or three are great," and then one or maybe two or maybe even three, hopefully not three, didn't do so well, but it somehow all averages out. This time it's a little bit different.
I think all four business units have been doing somewhere between well and extremely well. At least meeting my expectations and some of them exceeding, well exceeding them. Quite happy with this. I'm, you know, this is probably, I mean, this is the third call I do at SÜSS. This is the one I enjoy most. I'm looking forward to questions that you have also for the future. If I look at the four segments, I think all of them are developing in the way we want them to develop. That's something that I'm quite happy about. I mentioned the guidance at the beginning. No change here.
This is the exact same slide that you've seen last quarter and the quarter before that, and probably even the annual report for 2020 was published by my predecessor still. EUR 270-EUR 290, we will hit that number. If you look at this means we're going to have a strong fourth quarter. Of course, I'm looking at this quite closely. I have no intention of having egg on my face come January. 9-11 percentage points EBIT margin. After nine months, we're already above nine. That doesn't look like something that's unrealistic at this point, of course. Cash flow in a reasonable range, lower than last year, by the way.
Now, before we move on to questions, I have with me not only Tobias, who's our Head of Controlling, to answer any questions that are detailed enough that I might not be able to answer them, but we also have on this call Thomas Rohe, our COO, and I would like him to share some insights he has on our operational situations, commenting a little bit on the supply chain challenges we see and how we overcome them. After that, we will then proceed and move towards questions. Thomas?
Yeah. Okay. Thank you for your question or your introduction, Götz. Well, for sure, Götz, only a short remark because I think the supply chain issues are worldwide, really, in everybody's mouth and head. For sure, also we are facing some challenges in our supply chain. Nevertheless, as Götz's already mentioned before, the complete team here at SÜSS is eager and really highly committed to really solve those problems, also solve those challenges.
Really, up to now, we see that we are really able to overcome these challenges and that we are still committing to our delivery promises to our customers so that we are looking not over-optimistic, but optimistic into the last quarter of this year and also dealing with our suppliers and really finding solutions to overcome these challenges. This is a very short comment also on this, and we are for sure working on our manufacturing concepts, what they're doing there. Sorry for that.
I think we will also see in the future some real improvements also in our supply, not only in the supply chain, but also in our production, but it's at the moment a little bit too early to talk about. For this short comment, I would really keep it at this and looking for questions from your side.
Hey, thank you so much, Thomas. One sentence from my side. I thought about when I wrote the letter to the shareholder for the quarter, you know, do I mention this at all, right? I mean, the numbers are up, so I don't need to talk about this to explain any numbers. At the same time, we all read the newspapers. We all, everybody knows this is something that's happening in the world. I think it doesn't make sense for us to pretend that it doesn't affect us at all. I think what I really wanted to share is that we spend a lot of time and effort dealing with it, and we've been actually doing quite well.
I think that's one of the major success stories of the last quarter and a half, how the company is coping with this. This is something I'm grateful for all of our colleagues to do that. With that, I would like to move on to questions.
Ladies and gentlemen, we will shortly begin the question- and- answer session. Anyone who wishes to ask a question may click the hear button to connect with HD audio from your browser and then press the star followed by one on your web phone.
Thank you. Now, I was told that it's gonna take about 30 seconds or so before, for technical reasons, questions can be asked. I wanna use that time. You all know Franca, if you have any questions after this call. I also want to share our financial calendar for the next year. I think those dates are new. Nothing particularly unusual there. March 31st for the annual report. Once again, I want to thank you for taking the time to listen to me and Thomas. Looking forward to your questions and continuing this conversation. Are we ready for questions?
Ladies and gentlemen, at this time, we will begin the question- and- answer session. As a reminder, anyone who wishes to ask a question may click the hear button to connect with HD audio from your browser and then press star followed by one on your web phone. One moment for the first question, please. The first question is from the line of Jürgen Wagner from Stifel. Please go ahead.
Yeah, good morning. Thank you for letting me on. I have two questions. On hybrid bonding, you mentioned or you talked in your introductory remarks about your cooperation with SET. We heard from BESI, so the Belgian backup company, I think it was two weeks ago with their results, that they announced first orders for hybrid bonders. How are you positioned versus BESI, and is that a competitor at all? I think they have also cooperations. The second question, last quarter, you highlighted market share losses on longer lead time versus peers. Now you emphasized the progress you made on supply chain. Is that a topic at all anymore or was it just Q2 and now it's all on track again? Thank you.
Okay. Yeah, thank you for your questions. Let me answer the second question first. If I recall right, we did mention that long lead times are beginning to be a problem. We didn't talk about market share losses because of it. Clearly, if we had shorter lead times, we could potentially sell a few more tools, no question about it. What Thomas hinted at but did not go into any detail because we think it's too soon to go and share details, but an end-to-end performance transformation of the company is something that we have started, and I don't mean yesterday. One of the main things we're looking at is to make the company, to create the capability within the company to shorten lead times, ideally shorten lead times significantly.
I will not be able to give you numbers of where we are and where we want to be today, but we're not talking about an incremental change. In terms of the goal, we are not talking about an incremental change. That's something that's ongoing. That is unrelated to the current and shortage-driven supply chain challenges. I think those are two different things. If you look at the numbers and the publications of the company back to before I even joined last year, what you will see that lead time topic is not new. It's not new at all. When the company started growing significantly about 2.5 years ago, this started to become an issue. By the way, we are far from alone in that issue.
It's not that everybody else has much shorter lead times. That's not the case. It's a challenge for the industry overall. I would like us to get to a point where we are better than most competitor, meaning faster, more agile, rather than being in the middle of the pack or in some areas, facing the middle of the pack, right, which is where, frankly, company has been. In terms of lead time, your question was, is that not a topic at all? I mean, of course, this is a topic, right? An end-to-end performance transformation is not something that happens very quickly. What I meant, what I spoke about a little bit today in the call is the tactical measures we take to address what comes our way.
This is really about reacting to shortages, reacting to problems, reacting to anything. This is not just parts, sometimes it's logistics, right? The customer wants a tool, but the airport in China, most recently it was Shanghai, that the tool is supposed to be delivered is closed. Because of the paperwork that was filed, you can't really just ship it to another airport as you would maybe in the U.S. You have a problem. Now you try to solve this problem. Ultimately, some things can't be eliminated as a problem. That is what I was talking about. The need to improve, to sustain in a sustained fashion, improve operating performance. That need obviously has not gone away in three months.
That's the topic, the story of the next 1.5 to two years. You will hear more about this, as time goes by and as we can talk more about things we've done as opposed to things we like to do. That would be my answer to your second question. First question, hybrid bonding. BESI is a competitor, clearly. BESI, of course, has made its move for die to wafer bonding. Not wafer to wafer, but die to wafer bonding before we did. And again, before we signed the cooperation with SET, we did not have an offering, something that we could offer to customers. That's something that we will have now.
Of course, a month or so, month and a half, whatever it was, after we signed the cooperation, we are not talking about orders that are in our order book. It is something that has gathered significant interest among customers and potential customers, no question about it. We do believe that this is a very attractive market and one that customers will need hybrid solutions, hybrid bonding solutions. We believe that we can offer them. I'm hesitating to say any, but I mean, quote-unquote, any hybrid bonding solution they need. Meaning die-to-wafer, collective die-to-wafer, wafer-to-wafer, whichever one it is. That is going to be the way how we grow this business, right? It won't only be this cooperation, but that will be one part of it.
In addition, we have other solutions that don't require this cooperation that we can also offer. Yes, BESI is a competitor, and we are very aware of them and we follow them. No question.
Sorry, follow-up. Sorry, last question. Initial customers would then be TSMC and Intel? Or those who are testing.
Can't comment on individual customer names.
Okay.
Can't comment on individual customer names. I would say I mean, I think it's well known who are semiconductor players who are interested in hybrid bonding and who have a need for that. Those customers would be the ones we're interested in. Of course, some of them we know quite well because they have been customers for other solutions already, in some cases for a very long time. Then others we have a less long-standing connection with. Yes.
Okay. Understood. Thank you.
The next question is on the line of Johannes Ries from Apus Capital. Please go ahead.
Yes. Good morning. Can you hear me?
Yes, we can. Thank you.
Great. Yes, a couple of questions, if I may. Maybe first, again, to the bonding solution you just mentioned. Is cooperation with SET not the only solution? Maybe first to detail questions. There could be other partners, and if I look to BESI, they are cooperating with a large front-end company to have a combined solution. Is it necessary to have also maybe a closer maybe work together with the front-end guys? Because, to my knowledge, there will even be an integrated machine with front and back-end solutions from Applied Materials, which is a partner at the front-end side for BESI and BESI. Second question, when the combined solution of SET and you will be available?
I heard from former calls said it could be maybe already at the end of this year, beginning of next year.
No, not the end of this year. I don't know where you heard that.
Okay.
That would be.
Okay.
I mean, you know, to develop this in three months, I think nobody would believe me if I said that.
I would be surprised. Okay.
I surely hope this didn't come from anybody at SÜSS. No, for your first question. Of course, this is an interesting question. Ultimately, nobody will know which solution will ultimately carry the day. That said, my view is the semiconductor industry has always been, and I believe will continue to be best of breed. Sort of complete line solutions, if you will, for various reasons, have never really been successful in this space, even in the back- end, yeah. Even in the advanced back- end, and certainly not in the front end. You know, the way the industry looks like is for each key process step, you have one, two, or three, depending on the process step, leaders that provide most of the tools to everybody.
You know, anybody who wants to start up a fab, as some companies, for example, in China do from scratch, they go to the usual suspects. For the process steps where we have a compelling offering that others are using, they will then come to us. For the stepper, of course, they go to ASML, right? And so on. Now you ask the question, is an integrated tool between front-end and back-end? You know, I've read what you've read. I think the market will be the judge of that. We wouldn't be investing in this space if we didn't believe that our approach is promising. My sense is that the customer has a problem that the bonding requirements are going up.
Going up, meaning less spatial resolution, obviously the integration of the electrical and mechanical definition of hybrid bonding. Each application is somehow different, right? Different materials, different geometries, different environmental requirements, you know, how much pressure, how much which chemicals you can use and so on. Now, I want us to be able to look at a problem like this and tell the customer, "Yes, we can find a solution for you. It could be this, it could be that, it could be that, but we will have the solution for you." I think that, to me, is the first step to being successful. Of course, that solution has to be then compelling.
Excuse me, it has to be qualified, and then eventually it has to be at a, you know, cost per performance has to be in the right range. Of course, we will have to deliver that, and we will deliver that. That's the plan.
Okay. It's not necessary to work closely together with the front-end guys.
We don't believe so.
Okay.
You know, is it, might it be helpful? Who knows? I have heard nothing that says, if you don't do this, you cannot possibly succeed in this space. By the way, we're not the only one who doesn't do exactly that, right? What you just mentioned.
Okay. Another question on your MicroOptics business. Your predecessor maybe discussed in former calls that if it makes sense to be a producer of MicroOptics in the longer term and more to focus on the imprint solution on the litho side, which is also you deliver also the machine to your user, and so it's maybe it could a reason for other competitors of you not to buy this imprint machines.
It sounds like you maybe want definitely to go on with the production and do you also believe you can sell your imprint machines also into competitors or to other players in this case? You see the point. There was some thoughts.
Yeah.
Maybe it makes sense because you have a channel conflict maybe, yeah, with your customers.
Yes. I am aware of the history, for sure. From my side, the answer is pretty clear. I believe this is a growth opportunity that the company would be ill-advised not to pursue, number one. Number two, what are we in the business of? We are in the business of providing solutions for technologically difficult problems to customers. Not every customer of the world, not every problem in the world, of course, but the kind of problems that are in or near the semiconductor industry. I mean, if you think of MicroOptics, it's somehow a semiconductor-like process, but obviously it is not an actual semiconductor device we're talking about. This move from, or an expansion of our business space from outside strictly the semiconductor space, that's something that happened many years ago for SÜSS.
Something that I see as positive. We should be solving the problems that we are predestined to solve. Meaning problems where our capabilities position us well to solve the problems better than others. We should try not to solve problems, too many problems that anybody can solve, and the only way you can actually get the business is by being the cheapest way so far. Frankly, I don't think we have much of that business, such business right now. Back to MicroOptics. If you look at my history rather than the company's history, you will see that the logic of lowering entry barriers to customers by providing a product rather than the machine to produce the product where that makes sense is something that I believe in.
I have believed in before I came to SÜSS, and I fully believe in for SÜSS, for MicroOptics right now. Now, obviously, you have to specify this and you can't say, "Well, why don't you guys build a foundry to compete with, I don't know, TSMC?" Obviously, never going to happen. So the framework or the guardrail to this would be, obviously, it has to be something that we as a company can afford. We can talk about what that means, but, you know, a large scale CMOS fab would be out of the question for sure. For MicroOptics, this is not a limitation. It would have to be clear that we would be, if not the best, then at least a good operator of such a fab.
That the expertise we have would allow us to do it better than anybody, than others. I believe that's the case. The team we have, the operational team we have there is extremely good in providing throughput, in providing yield to a level that automotive customers accept it. This is not new. We've been doing this for years. We are growing with this, but the automotive business is not new for SÜSS MicroOptics. It's about three years old, give or take. I hope three years is roughly right. I mean, give or take a year, but it's not something that we started this year or last year. For that reason, I believe this, there is no reason why we shouldn't do this. Now, you mentioned conflict. You said in one sentence, others and competitors.
Not every other player who wants to buy imprint tools is necessarily a competitor. It is not the. Sorry, this is my computer here. I tried to switch this off, somehow it didn't work. Not every other player in the industry who is interested in buying imprint tools from us or others is necessarily a competitor for SMO. In fact, the vast majority do not compete. The imprint space is humongous. It's extremely broad. SMO, SÜSS MicroOptics, never in the past and had the ambition to do every imprint solution in the world, and it won't have that ambition in the future. The applications we want to do, where we have a specific USP that makes us well-positioned to provide the product.
It's clear. Although other applications are, virtual reality is clear. Maybe two follow-on questions, then I speed up. First, on the scanner, an update, because we know we have this LOI from TSMC for 14 machines or so. How you proceed and when we will see how we see maybe you see the ramp and so for revenues from this time.
Yes. I need to confirm very quickly if I can say something before I say it. Give me about 10 seconds.
Mm-hmm.
Okay. To answer your question, we have delivered the first of this new machine scanner to a customer.
Great.
This is no longer in the future. It's in the past. Hello, can people still hear me?
Yeah, I can hear you. Yeah, yeah.
Okay. No, that was a sound that either somebody hung up or I got hung up.
Yes.
I'm still here. Yeah. We have delivered a machine. We have orders for these machines. As you correctly noted, that was said in the past. Again, we don't speak about the customer identity.
Okay. Okay.
Your guess is as good as anybody's, probably. I have the I've consciously not really talked a lot about the scanner business today because it doesn't represent much of the present, as you know. That's not a surprise. Of course, the scanner is an asset, and we want to look very carefully at how valuable an asset we can make this. This means we are right now looking very carefully at what would be a path to really grow this business in a comprehensive way, in a meaningful way. At the same time, today is too soon for me to say, "Yes, I believe this is a significant growth area for the company." It might be, but I don't believe it to the extent I believe it with the bonder, to the extent I believe it with the MicroOptics.
I differentiate this. I make this difference consciously. It doesn't mean we have lost interest, not at all. We are going full steam ahead internally for this. I believe that the team we have in Taiwan and without unfortunately being able to go into the details, what they have accomplished in setting this up, this production, getting the first tool out to you know. Anybody who will buy a scanner is a demanding customer. This is also a demanding customer. That's a major achievement, and I'm very happy you know quite proud of what the team did and grateful that they accomplished this. Yes, we are pushing forward full speed with this business.
You know, if you're gonna have a follow-up question, how much revenue you expect in 2023 from this, I cannot answer yet.
Okay. You definitely will launch more machines in the coming maybe 12 months or so now. You have orders for definitely more and more maybe.
We do. Yeah, no change there.
We'll see more revenue next year. I have two quick questions then I make the line free. First, the margin of bonders and MicroOptics are still comparatively low. What target margins you have? It must be clearly double-digit in my eyes, and MicroOptics had much better margins in the past, but now you have this underutilization of this new fab, but it must be better, or?
It must be better. Yes, I will confirm that. I don't think I want to say numbers here, but clearly it needs to become better. I mean, double- digits. Well, okay. If I look at the nine months, then of course we're quite far from that, yes.
In the past it was.
I mean.
A margin of 20% as well, if you remember right.
I think there are some reasons why those figures from years past are not 100% comparable.
I know.
What is clear, and again, I have to choose my words a little bit carefully here, but if you look at the overall company, we've said, meaning I've said, after I came on board as well, 15%. I know that that's something I'm convinced that's something that the company will accomplish, right? I can see the path to this right now. I can't share everything of it with you, but that's for the overall company. Now mind you, that also means if you look at last year, the entire company was below. It was not two digits, right, for the whole company.
If you bring it back to SMO or a second, I think those ancient numbers that you looked at, where you said 20% or whatever, those were much smaller revenues. It was a much more niche-y business, and none of that was automotive. Now.
Mm-mm, mm-mm.
I'm a little bit careful there because the implication could be the automotive business isn't profitable. I don't see that. I think there's some element of that growth you've described, where there's a lot of costs that are against revenue that's actually future revenue, not today's revenue. Some of that is the case, but we wouldn't be investing and pushing this business forward if I didn't believe that this has the potential for an attractive profit.
Very clear. A final question. You mentioned interesting customers outside the traditional semiconductor space, emerging. Is that still the case, yes? That's still an opportunity going forward.
Yes, I believe that.
Okay, thanks.
Like with many other things, it's something I would be much more ready to speak about when we have something we can talk about that we have done, rather than just the opportunity which of course exists.
Okay, thanks. Only because you didn't mention it again, I want to hear still.
Fair enough. Yeah.
Okay. Thanks a lot.
No, it hasn't changed. My view on that has not changed.
Okay, thanks a lot.
Questions from anybody else?
The next question is on the line of Malte Schaumann from Warburg Research. Please go ahead.
Good morning. First one is a follow-up on the scanner, just for clarification. What makes you a bit hesitant to see that kind of the business to be less of a growth driver for the company in comparison to the others? Is it just pure size? Because obviously, the opportunity in bonders is much larger than it probably is in scanners and maybe the same is true for MicroOptics. Or has anything changed from the market side, based on your talks with your potential clients?
No, it's not primarily the size. Obviously, there's a size difference, but that's not primarily it. I am simply hesitant, and I'm hesitant not about the direction we want to go. I'm hesitant about sharing it in public on this call, right? Because there's a number of things we don't know yet. We don't know how broad. I mean, let me back up, I think. So there's proximity lithography, which has been around forever, which has a broad set of applications. There are literally dozens of customers in the world who use it, and it's extremely established. Then there are steppers. There are steppers from the low- end to the high- end. High- end, of course, is ASML. That's a space that we don't even come near.
If you look at the low- end, there's a number, not a handful, but there's a few companies that offer them. You can buy used ASML equipment. You have a number of choices for it, for equipment. Many people use it. The scanner is something that combines some of the benefits of both. It's not like there's six companies that make scanners, and it's not like scanners are used anywhere near as widely in the industry. We obviously have one very big customer. Of course, we have the history of having the whole thing shut down and very publicly shut down and then resuscitated and rebuilt, except no longer in the U.S., but in Taiwan.
Against that history, it's simply my point of view that we should be a little bit further in terms of orders, in terms of delivery. I mean, we've now delivered one machine, right, out of Taiwan, before I talk about in public how great a growth driver this is for the company. It does not mean that we have lost interest. It does not mean that we do any less internally. But if I write down today how am I going to get to 400? I'm hesitant to put a very large number or any large number for the scanners. Doesn't mean if we don't, you know, if we make it, that's great. It'll be on top. But it's not something that I view as something that's a given. Does that make sense?
Yeah, it makes sense. I mean, it's.
It's a communication device.
Fully.
It's a communication device, not a lack of confidence.
Yeah. That makes sense. For permanent bonding, I mean, I think that's a positive thing, that finally we are seeing some orders. Is it one customer? Is it multiple customers? How's the pipeline developing? Do you see a breadth of projects coming in, so that you clearly see broadening of the pipeline, so that kind of supports then future development?
It's a broadening, and that's good. I like that.
Yeah.
You know that in many cases, you have to go through some, you know, through the typical qualification process, which takes time, right, involves putting a tool there for a certain amount of time, all those great things. You know, we know who is interested, we know who has which problem. We know where we have machines for evaluation and so on.
Yeah, good. That's already seen in the third quarter. The order intake in the third quarter is already more than one customer for permanent bonding, or is that yet to come?
Yeah.
Okay, good. On hybrid bonding, the cooperation on SET, maybe a word on timing. How much time do you need to really develop the tool? Do you need a lead customer for kind of a pilot tool to develop a pilot tool? What are your potential competitive advantages you see coming from these or coming from the SET you might gain compared to the other suppliers to the industry?
Okay, there's a couple of questions on hybrid bonding. Permanent bonding, yes, that's, you know, I think actually I did give you the answer to that question. For hybrid bonding, yes, we're going to need a lead customer, at least one. Yes, it will take some time. We're not going to have a tool ready at the end of the year. That was kind of a jokes aside. It will take a typical amount of time for integrating this. I don't think I want to share a date. Obviously, we have a date, not just in mind, but something that we have as a plan. In terms of competitive advantages, I mean, it all ties to customer value. On the one hand, it is what precision level.
I hate to use the word precision because it always sounds so engineer-y and technical, but in this case, it's actually meaningful. Because it directly drives the scaling of the solutions that you can process. This is in a sense a little bit new for bonding. Bonding, you know, if you think of bonding, very old school, it's an area-driven process. You have two flat areas that you merge together, right? With hybrid bonding, things like overlay, things that you know more from other process steps in semi, become extremely important because you need to have an extremely clean surface, you need to align it extremely well. That's still way oversimplifying it. Those are the things.
On those levers, we believe that we can be as good or better as others. That's the basis for the partnership. Then, of course, the questions are, throughput, cost of ownership, yield, uptime, the usual, ultimately, what ties to OEE. Where we believe we can differentiate. I think that's the die placement is what SET brings to the table, and automation, metrology, things like that is what we bring to the table. Oh, yeah, and the activation, of course, the clean. That's in a nutshell why we believe this is going to be a solution that is going to be attractive to customers.
Okay. Quick update on temporary bonding. Did you see the pipeline develop for projects coming into the pipeline? How do you see the dynamics on the market currently?
From what we can see now, we will remain. I mean, we will retain an attractive market share. High market share, yeah.
And from.
That said, temporary bonding.
Sorry, one addition to that. I think that said, temporary bonding, and this is not new, is not a process step that customers love to invest a lot of money in, because ultimately, if I say it doesn't add value to the device, that's of course also, you know, it's a little bit of a silliness because if you need temporary bonding, the device wouldn't exist without temporary bonding. But it's a bond that you form and then you dissolve it. So ultimately, it's gone by the, you know, the bond that you form is gone by the time you're done producing. So it's not something that companies use unless they absolutely have to. I don't think that market has tremendous growth.
Do you see, I don't know, in the next 12, 18 months, investment cycle upcoming?
Hard to say.
Okay. Fair enough.
Hard to say.
Last little question on MicroOptics. The profitability decrease in the third quarter, I mean, it's always fluctuating a bit, but was that only due to the underutilization due to the new, clean room build-up, or were there, other issues?
No systematic issues. If you're asking is it because we are, you know, our prices are dropping rapidly or something like that, no, that's not the case. I would urge you, especially for MicroOptics, not to read too much into quarterly figures. Profitability, that is.
Yeah, true. Okay. Okay, that's fine. Okay, thanks.
We have one last question from the line of Michael Reis from Discover Capital GmbH. Please go ahead.
Hello, everybody. Maybe just one last question. You had EUR 1.5 million reversal in the litho segment for the two scanners. I just was wondering in which quarter is the EUR 1.5 million and how they're putting on your margin. So it's just.
Sorry.
Drops through to the EBIT, right? The EUR 1.5 million.
You're talking about the what? The write-up? Sorry, you're talking about the write-up on the.
Yeah.
Okay. Sorry. The question was which quarter does this show up?
Yes.
One second. This showed up in the third quarter, no? The EUR 1.5 million. Give me one second. That was in the third quarter. Thank you.
Just all of the litho segment, right?
Yes.
Okay. Thank you. That was all.
There are no more questions at this time, and I would like to hand back to Dr. Götz Bendele for closing comments.
Okay. Well, thank you. Again, thank you everyone for taking your time to speak to us. I hope I was able to answer most questions. If you have any additional questions, feel free to reach out to Franca. I hope to speak to you again, not in three months, actually, but the next call will be in all likelihood for the annual results at the end of March. Thank you, and have a great day.