Good afternoon, and a very warm welcome to everyone attending today's CMD. My name is Moritz Gmeiner, and I'm heading Investor Relations for ams OSRAM. Before we begin, please take note of the disclaimer for this presentation. Let's take a quick look at our schedule for today. We will have presentations on delivering growth, our innovation leadership, integration, synergies, manufacturing and portfolio, our financial model and the path to our targets, and the growth drivers in our end markets, automotive, consumer, and industrial and medical, followed by a Q&A session at the end. For the Q&A session, you can send questions during the presentations, either to the email address shown here, cmd@ams-osram.com, or enter your question in the comment box below the video live stream. With this, I'm very happy to hand over to Alexander Everke, our CEO.
Thank you, and a very warm welcome to everyone. Let me start off by introducing today's other presenters. We have Ingo Bank, our CFO, Thomas Stockmeier, our CTO, Mark Hamersma, our Chief Business Development Officer, the business heads, Robert Feurle, Jennifer Zhao, and Jens Münkel, and Mike Lusk, responsible for semiconductor operations, all seasoned industry veterans with a wealth of market and management experience. I will guide you through how we will deliver double-digit revenue growth with our diverse portfolio of growth sectors. Let me start with our track record of growth and integration. When I look at our track record, we have been pursuing a growth strategy with complementary M&A and have outgrown a number of semiconductor peers over the last decade. We have achieved 6x revenue growth in our consumer activities over the years from 2016 to 2020.
In 2021, we experienced a market share loss, but we are engaged in a broad and robust consumer design pipeline which will return the business to growth. Our automotive and industrial and medical business showed consistent growth over the last five years, with the only exception of 2019, and we grew 23% pro forma from 2020 to 2021. We are successfully executing on commitments made in the OSRAM acquisition and integration. As part of this, I expect to complete related divestments in 2022 to create a new base for the company. We have been pursuing a full growth strategy with complementary M&A. Coming from a focus on analog mixed signal ASICs, we changed the focus to optical sensor solutions from 2016, together with acquisitions of CMOSIS, Heptagon, and Transcept Photonics.
This drove very significant growth with a CAGR above 50% from these acquisitions, which were only generating EUR 150 million of revenues when acquired. The acquisition of OSRAM has been a clear strategic continuation of that path. Through this acquisition, we have become a leading provider of optical sensing, illumination, and visualization solutions and have realized over 55% CAGR growth since 2016. This is creating the foundation for our excitement about the extended portfolio and the opportunities it creates. We will continue our track record of delivering on acquisition and of driving growth for our company. Over the last decade, we have clearly outgrown the semiconductor market and a wide range of peers. For this comparison, we were only looking at our semiconductor business when including the OSRAM acquisition.
We achieved 28% CAGR growth over that period versus a market growth of 8% and the largest peers growing at 11%. We have been able to remain a dynamic, innovation-driven organization through this growth, and we fully expect the same for the significantly enlarged ams OSRAM. This expectation is based on the strong positive momentum we are seeing across our internal teams as they have come together over the last year. We are successfully executing on the commitments for the OSRAM acquisition integration. Let me run through the strong achievement we have realized so far, and please bear in mind, we have only had operational control of OSRAM since March last year, so just for one year. We have closed the deal and realized the DPLTA and delisted OSRAM as planned. We have diversified the revenue mix compared to the historic ams and OSRAM.
We are accelerating in new optical technologies with clear market traction in fields like Micro LED, AR/VR glasses, and automotive ADAS. We are realizing a unique go-to-market with one OEM sales force in place. Our original synergy target was increased to reflect further savings, and we are fully on track with the creation of synergies and savings. The integration costs, on the other hand, have been reduced and are expected much lower than first thought. We are presenting the optimization of the combined semiconductor manufacturing footprint today, and we are divesting non-core business at a fast pace and have dissolved the Osram Continental joint venture as planned. Lastly, we achieved net debt to adjusted EBITDA for 2021 of 1.9, which was much better than our target. Now let me focus on how we plan to become the leader in optical solutions.
To recall, we are building our business around our vision and mission. Our vision is to create the uncontested leader in optical solutions, focusing on areas of sensing, illumination, and visualization on a global scale and headquartered in Europe. To achieve this, our mission calls for bold investments in disruptive innovation and continuous transformation, delivering best-in-class profitability and growth. On this basis, we offer a very clear value proposition for our company, and this is the backdrop to how we implement our strategy. Today, we will fill this value proposition with life for you. I will focus on the elements one and three in particular. My colleagues will focus on the other elements later on. A clear commitment to growth. We want to become the leader in optical solutions driven by secular growth trends in automotive, consumer, and industrial and medical. A clear path to strong, sustainable profitability.
We have a full roadmap to increase adjusted EBIT margin to our target of 20%+, driven by portfolio optimization, manufacturing footprint consolidation, synergy realization, and revenue growth. A balanced and diversified business mix. We will run a balanced application and end market exposure, serving a diversified global customer base, which means broadly supported earnings streams. A prudent financial policy. We want to delever based on strong operational cash flows and proceeds from divestments while maintaining a defined investment path for the growth. Last but not least, a clear focus on long-term value generation. We are reinvesting in differentiating technology and innovation and related organic growth opportunities, and we do so in alignment with our focus in ESG. This value proposition is complemented by the inclusion of key stakeholders.
Our purpose as a business purpose involves and is built around the four stakeholders group: customers, employees, shareholders, and society. For our customers, we enable them to innovate by bringing intelligence to light and passion to innovation. For our employees, we provide an attractive environment and opportunities so that we can attract, develop, and retain the best talent. For our shareholders, we deliver growth and profitability as a leader in our market so that we responsibly create sustaining value. For society, we improve the quality of life while reducing our impact on the environment so that we play our role in making life better on larger scale. Our overall value proposition is linked to a group-wide approach and commitment to ESG. We are still in the phase of building a strong ESG framework for the combined group with clear focus areas going forward.
This reflects the short period of integration, but important steps are taken or underway. We plan to have our group-wide ESG strategy in place by end of this year. Compliance processes and the code of conduct have been implemented for the group already. We will publish the first ams OSRAM sustainability report in May, which will follow the GRI framework. Given the ongoing integration, ESG-related aspects will be included in management targets from next year onwards. In our ESG strategy, we focus on low carbon, value chain, and responsible resource use for the environmental side. Responsible people management and responsible sourcing on the social side. Ethical business practices on the governance side. We are proud to introduce the first ESG targets for the group to demonstrate our commitment as ams OSRAM.
Climate related, we want to be carbon neutral as a company by 2030 and endeavor towards a net zero ambition. In the area of diversity, we want to see 25% of women in leadership positions by 2026, a clear increase from 21% in 2021. Let's now look at what's going to drive our growth. When we look at the optical space, we have identified several mega trends which are driving demand for our optical solutions across our defined target markets. These are the continuing digitization of our life, smart living in close relationship with IoT, and energy efficiency and sustainability. As you can see, these trends create a broad spectrum of opportunities for different optical solutions across the consumer, automotive, industrial, and medical end markets.
These span a wide range of applications, which is exactly what we would like to see and how we are setting ourselves up as the combined company, and we will touch upon these opportunities in the presentation today. We see a clearly growing address market for ams OSRAM. This is the case for both our semiconductor end markets and the application area sensing, illumination, and visualization. Our address market is expected to grow 8%-10% CAGR over the next four years overall, whereas the total semiconductor market is expected to grow only by 5%-7% CAGR. With our address market, we see a mix of growth rates between close to 10% to the high teens, depending on the semi end market, and between high single digit up to 20% depending on the application.
We are focusing the company on target markets, which are growing more strongly than the overall market, and that will support our growth plans for the future. We have defined a clear strategic approach for our combined business. We are pursuing market leadership across key components for optical solutions, different light sources or emitters from LEDs to specific lasers, light path optics on the transmission side, and then also on the receiving side. Different types of specific detectors, such as light and image sensors. In addition, we address the sensor processing area, including relevant algorithm. Our strategy is to achieve best-in-class application performance, because we can offer cross-optimized key components and combine them into solutions depending on application, market, and customer needs. With this platform, we can offer micro models and solutions for a range of key growth applcations.
This means we develop best-in-class components with innovation leaders, from emitters to related ICs. We offer differentiated micro modules assembly, largely with in-house components such as light sensors and smart emitters all the way to micro cameras, and drive solution on that basis. We develop a broader market and cross-optimize our own components with system reference solutions to enable customers. Already today, we are top three in the optical semiconductors across major areas of emitters, optical elements, detectors, ICs, and micro optics. We are the only player in the industry covering the full optical value chain. This is a big difference to any other player out there today. Some others are very large in a certain field, but much more limited in the scope they can provide.
With this full scope we cover, we can offer unique value to customers, which is what we hear back from them, and which is why we are confident to be able to grow our business as a broad-based leader in optical semiconductors. Now let me talk about why we are confident to deliver double-digit revenue growth for ams OSRAM. When I look at our business, we see it as a semis growth business, an established semi business, and a traditional LNS automotive and industrial lamps business. In total, we had EUR 5 billion revenues last year. When we take away the communicated divestments out of the LNS segment as a total, both announced and still coming, then you have a net pro forma revenue base of EUR 4.2 billion for 2021.
From this revenue base, we see a multilayer Semis growth business, which we expect to have a revenue CAGR of over 50% to 2026. A steady growing established Semis business, which we expect to offer a revenue CAGR of 3%-5%, so low to mid-single-digit percentage t o 2026. Our total Semis business is expected to give us a revenue CAGR of above 12% from 2021 to 2026. The LNS traditional lamps business we expect to be more or less flat in revenue growth over that period. Together, this combination creates a diversified growth platform, which enables us to deliver more than 10% revenue CAGR growth from 2021 to 2026. Let's now take a look at the Semis growth part of our business. Very importantly, this consists of a diversified set of growth vectors across our target markets.
We are building our growth on many pillars. This will contribute in combination and layer onto each other over the next years to deliver our targets. This creates a very strong and very balanced underpinning to our growth plans. This is also what we are out to achieve with the combination of ams and OSRAM and what gives me the strong confidence in achieving the targets we have set ourselves. The consumer portion is built around multiple vectors, including Micro LED, 3D sensing and camera enhancement, consumer AR/VR, and vital signs monitoring. The automotive portion is powered by applications including dynamic forward lighting, signal lighting, lidar, in-cabin sensing, projection, and smart surfaces. The industrial and medical portion is driven by growth vectors including horticulture and smart farming, UVC LED and laser projection, digital health, and micro cameras.
These are areas that we will look at in more detail later today and give you a sense of the breadth and depth of this portfolio of growth. Together with top-line growth, we are keen to drive a balanced mix of end markets and application areas for our business. This lets us benefit from a meaningful and relevant exposure to all market opportunities without the business being significantly skewed into any one direction. Looking at our mix of end markets, we have already moved from a pretty strongly concentrated business for ams back in 2019 to a quite balanced situation of 2021, with automotive at 41% of revenues, consumer at close to 30%, and industrial and medical at 31%.
What we target here for the long term is a very balanced mix with automotive and consumer business of approximately equal size at 35%-40% of revenues, and industrial and medical somewhat smaller at 25%-30% of revenues. In terms of our application areas, we also see a distributed revenue split already now, with sensing at close to 40% last year, illumination at 32%, and visualization still small at 7% of revenues. The rest was made up by the traditional business. Long term, our expectation is to have a well-balanced mix here as well, where sensing accounts for 40% ±, illumination for 30% ±, and visualization for between 15%-20% of revenues. The Lamps and Systems would then reflect a lower relative contribution to the group.
At the same time, it's very important for us that we engage across a broad and diversified customer base in our different end markets. Looking at the concentration, we see a distribution where for 2021, our top 10 customers accounted for just under 30% of total revenues. Over 70% of our business was very widely spread. Here, our long-term target is to have the top 10 customers running in a very healthy range of 35%-40% of total, with 60% or more of our business distributed across a larger customer base. This expected distribution will have us right in line with our large European semiconductor peers, which average around 35%-65% split between their top 10 customers and the rest.
Taken together, I'm very glad to see that as predicted, we are combining significant revenue growth with a high quality of revenues, which means a very attractive balanced end-market application and customer split for our business. To wrap up, let's take a look at the next steps in our journey. We see three phases for our combined business from last year to 2024 on our path towards leadership in optical solutions. Last year and through much of this year, we are creating one company. We are executing on our business portfolio alignment. We are implementing common platforms to run business and the new organizational and cultural model. We have been driving first-year synergies with the majority from OpEx, and we defined and completed future solution roadmaps. Starting this year and well into next year, we'll begin to leverage the strategic portfolio.
Disposals will be completed and planned portfolio will be in place. This means that our new revenue growth base has been established, and we will be driving second-year synergies, which will be both on OpEx and COGS side. We will also drive first-generation joint solution developments and are able to fully leverage the combined IP and resources. From 2023 to 2024, our focus will be to drive growth and profit targets. Our midterm growth drivers will start to kick in and become visible in our performance. At the same time, the longer-term growth vectors come firmly into sight. Last but not least, we will drive third-year synergies, mostly from manufacturing COGS, and benefit from cross-selling opportunities. Now, here are your key takeaways from this section. We have a track record of growth and an unchanged commitment to growth from ams OSRAM.
We are successfully executing on the commitments from the OSRAM acquisition and integration, including all planned disposals. We are already a top-three player in the optical semiconductors today and the only one covering the full optical value chain. We expect to outgrow our market, our SAM, which has a CAGR of 8%-10%, with a revenue CAGR of more than 10% from 2021 to 2026. This growth is driven by a broad and diversified sets of drivers across all target markets and application segments. At the same time, we will be driving our already balanced end market and application mix with a well diversified customer base. Now I'm happy to hand over to Thomas, who will focus on our leadership in innovation.
Ladies and gentlemen, let me now present our innovation and technology leadership. My name is Thomas Stockmeier, and I'm the Chief Technology Officer of ams OSRAM. This is the outline of my presentation, and let me start by explaining our technology leadership position in optical solutions. We at ams OSRAM have a comprehensive portfolio of technologies for optical solutions. From the top to the bottom of this chart, you can see the value creation starting from what we call the front end, be it silicon or compound semiconductor wafer manufacturing, the optical path, and finally the back end with conversion materials and packaging. It is important to point out that we not only design and develop, but also have our own production along this value chain. On the front end, we have all the different light sources such as LEDs and lasers, but also CMOS technologies for integrated circuits.
In the optical path, we work with optical elements such as lenses and waveguides, as well as filters and passive optics like diffusers or polarization gratings. Finally, also a great source for differentiation, we use color conversion materials for LEDs, packaging technologies for optical modules, and a broad range of LED packages, which I will detail further in the next section. You can see from this figure that we deploy these technologies in all our vertical market segments, namely automotive, consumer, and industrial and medical. By going down from the top to the bottom, the level of integration increases, and the more we tailor our solution to specific customer needs. This of course, requires not only hardware, but also firmware and software, lately, making more and more use of edge artificial intelligence. Let me please zoom in to the optical path to explain this a bit further.
We divide the optical path in four segments. The light shaping with diffractive optics and micro lenses, the light transmission with prisms, mirrors, and waveguides, of which you will hear more later. The light filtering with dielectric and absorption filters, as well as diffractive optics. The light collection with diffractive optics, micro lenses, and non-imaging optics. The optical path is a wide and diverse field, as you see, but it is just one of the many of our technological capabilities, and of course, it is subject to intense R&D and consequently to manufacturing. To illustrate how we apply our technological competencies, let me give you the example of complex micro optical modules which are produced in high volume. The significant integration increases performance, reduces cost of ownership, and strongly increases content.
The example I've chosen is ambient light sensing, where we hold a clear market leader position since many years. From the left to the right, you see how ALS, ambient light sensing, developed over the past five years. In 2017, we produced an RGB sensor with a clear mold package on a substrate and wire bond connections to the ambient light sensor chip. Just two years later, this already turned into a spectral sensor, adding many more precise photodiode channels, as well as integrating the aperture into the package. Another two years later, we added true color sensing with an unprecedented performance and started to integrate aperture and diffuser into the package.
Our latest device this year exhibits extremely low C height, deploying technologies such as through-silicon vias, which make bond wires obsolete, very high performance dielectric filters, enabling a wide field of view, and thus allowing to directly deposit the diffuser on the ambient light sensor chip. The ambient light sensor chip itself becomes more sensitive, less noise sensitive, and higher performing. As a second example for complex optical modules, I want to use micro cameras. Cameras as small as 2x3 mm footprint with 2 mm height consists of an image sensor, in particular here, a global shutter sensor, combined with the optical path, which is an ultra compact and precise lens tech, as well as the package around it. Such cameras are used in AR/VR glasses for consumers, but also for disposable endoscopes in the medical market and for a variety of industrial application.
Again, this is a good example where you see how we bring our competencies together, not only design and develop, but also to manufacture such complex and differentiating devices in our factories. Next, let us take a look at our differentiation and leadership in LEDs. In this figure, we plotted cost leadership on the vertical axis versus performance leadership on the horizontal axis. It is important to distinguish these two aspects. We see many of our competitors, predominantly in Greater China, positioning themselves in the cost leadership, but lower performance quadrant with products like consumer general lighting or video walls. Whereas we strategically position ourselves in the opposite quadrant, focusing on high performance with LEDs for projection, horticulture, and UVC, just to name a few. We also position ourselves in the quadrant on the lower right, where performance and cost is more balanced.
For example, LEDs for outdoor lighting or infrared vision. With this positioning, we constantly push the envelope of performance, quality, and differentiation, and we pride ourselves to constantly innovate along the value chain of LEDs. To get to know LEDs, let us first look at the various technology platforms. Different to CMOS, where you only work with one base material, namely silicon. You need to use three different complex three-five compound semiconductor materials due to the different wavelengths of the emitted light. AlInGaN from UV to green, InGaP from yellow to red, and AlGaAs for the near infrared. The complexity of LED and laser technologies starts right here.
The base material selection and the architectural growth process is followed by a large variety of chip technologies for LEDs, with either surface emission, like our UX:3 or thin-film technology, where the light comes out from the surface, or bulk emission, where the light comes out also from the side. Different chip technologies for edge-emitting lasers, where the light is emitted horizontally, and VCSELs, vertical cavity surface emitting lasers, where the light is emitted vertically. Last, but not least, micro-LEDs, of which you will hear more in the next section. Adding to the differentiation and technology leadership are the conversion materials, being either phosphor-based materials or quantum dots. The word conversion describes the property of these materials that they absorb light at a shorter wavelength, for example, blue, and re-emit this light at a longer wavelength, typically red. They transform from blue to red.
With this, you can generate white light by mixing the different colors of the visible light spectrum, but just starting with blue light emission. Finally, we have a broad spectrum of optical packages tailored, and differentiating solutions for our customers. Let me make this broad emitter and package portfolio more tangible to you. In the upper half, you see the three different material systems to cover the whole wavelength range from invisible UV light on the left, to the visible spectrum, to the infrared, which is again invisible to the human eye. On these base material wafers, we grow the active layers by epitaxy, and then we singulate the wafers into chips, which typically range from 180 micrometer squared to 2 mm squared, with surface or bulk emission, as just explained.
On the bottom, you see our broad and differentiating package portfolio, starting from pre-mold and lead frame packages to ceramic packages for superior heat removal to hermetic sealed metal can packages and special packages like filaments or even special laser sub-assemblies. Many of these packages are manufactured in-house. Out of this wide technology and differentiation spectrum from the high-performance LED quadrant, let me exhibit a few examples. On the left, you see our leading edge Hyper Red devices, enabling very high productivity in horticulture. With carefully engineered architectural processes and tailored chip technologies, we improve the wall-plug efficiency by 3 percentage points. Doesn't sound like a lot, but it really represents one or two years of competitive advantage. Jens will later come back to this example. In the middle, you see an example of advanced conversion materials.
With our quantum dot technology, where we succeeded to produce environmentally stable quantum dots, we improved the performance by 8 percentage points, having the world's only quantum dot technology which is stable enough that you can directly deposit these quantum dots on the LED chip, leading to a higher color quality and higher efficacy. On the right side, you see an example of a bulk emitting LED for panel backlight, which differs from the competition in that it is an automotive qualified EMC package providing the highest stability and lifetime. Let me now share with you why and how we are uniquely positioned to capture the Micro LED opportunity. In the world of Micro LEDs, we focus on the smallest Micro LEDs with chip size of 10 micrometer or less to capture the Micro LED display market, predominantly in the consumer space, like smartwatches, smartphones, and AR/VR micro displays.
There are so-called Micro LEDs already on the market, but these are much larger devices with typical size of 50 micrometer squared, so 20 times larger area. With such LEDs, you can of course demonstrate Micro LED displays, but these chip sizes will not at all enable a disruption of the display market, which we will achieve. Why will Micro LED be the next revolution for displays? Well, there is a number of performance indicators which lead to this conclusion. Micro LEDs are superior in many aspects. Let me pick just two parameters out of this list, which you see here. The Micro LED display is much, much brighter than its predecessors, and it has a very large viewing angle.
Even in bright sunlight, you can look at this display even from the side, and you will see the display content. Also, the Micro LED display offers possibilities of sensor integration, which is, of course, our home turf, and you will hear more about this when we look into the future technologies. If you have ever seen such a display and witnessed its performance, you really want to have this kind of display, and you will never go back to the older technologies. However, to make a Micro LED display a reality, you have to mature the technology and drive down the cost per display. The market analysts see the Micro LED display taking off already in 2024 with displays for smartwatches and AR/VR. From there, it continues to grow and rapidly expands when the Micro LED displays are introduced to smartphones.
There are certain assumptions for this market development, and let me just emphasize 8-in wafer production to achieve the productivity, yield, and manufacturing cost to enable this market adoption. Without 8 in wafer manufacturing capability for the highest possible productivity, the Micro LED display market, as shown here, is unlikely to happen. In the new Micro LED display world, we will be the provider of the Micro LED wafers, focusing on epitaxial growth and wafer manufacturing. Our wafers are supplied to display assemblers, where the display will be produced, tested, repaired, of course, also incorporating other components like micro ICs and backplanes. The display is then moved on to the final display module assembly. It is important to note that this supply chain is very different from the established, vertically integrated OLED or LCD display manufacturing today, where the light source is an integral part of the manufacturing flow.
Therefore, Micro LED displays open a unique opportunity for us. Let me make the very small size of these Micro LEDs more tangible to you. The photo on the left shows a typical high-power LED with 1 mm square size. We placed a mini LED of 130 micrometer square size into this, the blue one, and you see how much smaller the size is already. However, we also placed the 10 micrometer squared Micro LED on this LED chip, and you probably only spotted, thinking of a defect in the LED. It is not. It is a Micro LED. Or to give you an example which is probably still closer to your daily life, just imagine on a EUR 1 coin, you can place more than 4 million Micro LEDs, 4 million single and functioning LEDs. Developing high-performing Micro LEDs is challenging.
LEDs generate light in the bulk of the device, and the perimeter, no light is generated as the material is disturbed by defects introduced from the separation processes going from wafer to singulated dies. Therefore, the larger the ratio of the perimeter to the total surface gets, the less light is emitted. As you can see on the left-hand graph, this ratio changes by two to three orders of magnitude from high-power LED to Micro LEDs, depending on chip size. When we plot the light output measured as efficacy in arbitrary units against the current density of the LED, you see that a high-power LED emits at a level of six at its typical current density, whereas a Micro LED emits almost no light at its typical current density of 1 amp per sq cm. This is because of this very high perimeter to surface ratio.
With this performance, you certainly cannot create a revolution in displays. We took on the challenge, and with quite some proprietary technology steps, carefully engineering the parameter of the red, blue, and green Micro LEDs, we managed to improve the efficacy by a factor of 20-30. With this achievement, Micro LED displays now become feasible. This, of course, didn't happen overnight, but it is the result of many years of significant research and development effort by very skilled engineers who are the best experts in LED technology. Not only do you need the right chip technology, you also need a different manufacturing environment. Today's LED factories use 4-in and 6-in material. Some even still use 2-in. Working from proximity mask aligners in a relatively simple cleanroom class of 10,000 environment and limited automation.
To realize Micro LED manufacturing, you need a very different environment, which looks very similar to CMOS factories, where ams OSRAM has a lot of experience in. You need 8-in wafers, stepper lithography, a much better clean room class, and of course, in-line metrology and full automation. It is not feasible to upgrade existing LED factories with reasonable effort to play in the Micro LED display market. We at ams OSRAM are uniquely positioned to become the number one player in the Micro LED market and capture the revenue potential. This and foremost, we have the best performing Micro LEDs. The blue and green, we are among the top three, and in red, we are clearly leading. Not only do you need the best performing and smallest Micro LED, you need also a scalable manufacturing to capture the display opportunity.
For this, we are building the world's first 8-in LED manufacturing line to develop and manufacture Micro LEDs in Europe and Malaysia, building on many years of proprietary know-how and intellectual property. Let me summarize this section. ams OSRAM focuses on very small Micro LEDs, which is a prerequisite to commercially viable Micro LED displays. We managed to get the performance of these Micro LEDs to a level which make displays feasible. We clearly position ourselves as leader in this emerging market by building the first scale 8-in and fully automated LED manufacturing line. Now, let's have a look at technologies and solutions where we combine our capabilities for differentiating products, and let us have a sneak preview into our research labs to see what the future will bring. Here are two examples where we combine light source, optical path, and ICs to differentiating products.
It should be pointed out that we do not only develop these components, but that we have also the manufacturing in-house. On the left side, you see a new device for automotive front lighting with 25,000 small LEDs on one chip, which are directly mounted to a driver IC. This means 25,000 individual contacts for each anode and cathode of the LED, and then automotive-grade packaged. We will hear more about this fascinating device from Robert later. On the right side, you see a complete laser beam scanner, which will be used in smart glasses. Here we start with an edge-emitting laser, a so-called multi-ridge laser for red, green, and blue. The more green is needed to match the human eye's perception of colors. These lasers are mounted into a special package together with prisms to emit the light vertically.
This is then combined with a laser driver IC, specially designed for these lasers and assembled into a package together with the combiner optics. This very compact and highly differentiating projection engine with cinematic image quality at the lowest power consumption is only possible because we have all the required competencies under one roof. Two more examples. On the left side, we show a high-performance vital sign monitor, which you will hear more about from Jennifer. In a vital sign monitor, you shine green, red, and infrared LED light through the skin and measure the reflected light with a very sensitive photodiode. The ASIC filters and digitizes the signal as well as it drives the light sources. Proprietary algorithms translate the measured signals into vital signs. Why is this special?
Because we can produce tailored LEDs and photodiodes derived from our system requirement specification and optimize the signal path and algorithms to an unprecedented sensitivity and accuracy. On the right side, you see a UVC sterilization solution, which Jens will talk about more. Here we combine the UVC light emitter with a UVC sensor and a presence detector module based on 1D time-of-flight to establish a closed loop control and activate this disinfection only when a person is not present. Now, take a look into the future. A new sensing method is the so-called self-mixing interferometry. You see the graph on the right side, how this works. In this case, a laser is used as light source, but also as a light sensor at the same time.
If light is reflected back from an object into the laser, it disturbs the lasing effect, and the junction voltage and the power output are changed. For normal laser applications, this is absolutely not wanted. Now we want it, and we cultivate it because the change in junction voltage and power is a measure for the distance of the object. Same as in lidar, but just in one device and not with separate emitter and detector. This self-mixing interferometer can be used in a large range of applications, and I just name a few. For example, you can make an optical microphone which exhibits a very high signal-to-noise ratio in a small form factor, and it even can be used for directional hearing. A perfect device for consumer applications. Another one is SMI for vital signs monitoring.
We can measure the movement of blood cells in the veins, and we can reconstruct the photoplethysmography signal from the laser interference pattern as you see it on the bottom right. You can take this SMI principle even one step further. You can modulate the laser light with frequency. In such frequency modulation, you cannot only measure the distance to the object, but you can also calculate the speed of the object due to the frequency shift of the modulated signal, which we all know as the Doppler effect. With this modulation of the laser light, you solely sense the reflected light which is emitted from this particular laser. This means the signal is completely immune to stray light, to the reflectivity of the object, and other disturbances. Let us go one step further in the future and look at a different application, smart glasses for AR, VR.
In a smart glass, you need to couple the light from a light source, such as a projection engine, which I talked about before, into the glass, guide it along the glass, the so-called waveguiding, and then you have to couple the light out of this to bring it, the signal, into the eyeball. This is depicted on the upper right side. Pretty straightforward, isn't it? What's the issue? The issue is that you lose 99% of the light on the way before you hit the eyeball. Just a mere 1% efficiency. This for a smart glass, which needs to be as battery efficient as possible. How can we improve the efficiency? We use volume phase holograms instead of gratings used in waveguides. Such volume phase hologram combiners have a much higher efficiency, and in our labs, we already demonstrated 5% efficiency.
To drive this even further, we don't use waveguiding at all anymore and send the light from the projection engine directly to a very special lens, which reflects the light into the eyeball, and this even with a much larger eyeball area. 50% efficiency could be demonstrated with such a solution. Now, let's look even further out. I talked about the unique opportunity of Micro LEDs and that Micro LED displays can integrate sensing quite well. Here is an example what this could look like.
We use the known effect of lensless, and also known computational imaging, which was invented many years back to overcome the problem of optical paths to X-rays. What we have done in our labs was to integrate small infrared photodiodes into the pixels of the Micro LED displays as you see it on the left side. With this, you can sense light reflected from an object.
You need to focus the light on the sensor, and you can't use bulky lenses, of course. You need to stay flat. This is where we remember the computational imaging. Instead of a lens, we code the light with a special aperture, and after sensing the light in the photodiode array, we decode the information contained in the light with neural network computing and reconstruct the 3D image. The result is demonstrated in a short video on the lower right-hand side. Here, we make gestures with three fingers on top of the display, about 20 cm to 50 cm away. You can see how the display sees the finger as we track, rotate, or zoom.
All of a sudden, the display is no longer just a brilliant display, but it can sense gestures, recognize faces, or can even measure distance and speed of objects when you integrate SMI lasers instead of photodiodes. Let me summarize and give you the key takeaways of my presentation. We have a wide and deep technology portfolio ranging from light source, optical path, and package to IC and software and algorithms, enabling differentiated products and integrated solutions across the value chain. Our market-leading LED technology focus on highest performance in epi, chip, light conversion, and package to manufacture differentiated products for the most demanding applications. We at ams OSRAM are best positioned to capture the Micro LED opportunity, which is the next big step in display technology.
We are solving the technical challenges with highly performing micro-LEDs with sizes of 10 micrometers squared and below, and we have a clear industrialization path for volume applications with our 8-in scale LED fab. The combination of ams and OSRAM into ams OSRAM, deploying the knowledge, creativity, and passion of our engineers, leads to truly disruptive innovations to serve the mega trends of our markets. Thank you for your attention. Now I will hand it over to Mark.
After the exciting look into the kitchen of the new technologies that are brewing and the products that ams and OSRAM can develop together, I'd like to go into the progress that we're making in the integration of the two companies of ams and OSRAM and the synergies as we're realizing them. We've run a very comprehensive post-merger integration program, and we're in the execution phase of over 2,000 initiatives to implement the PMI plan, which we are tracking in a very state-of-the-art workflow tool. The planning for the integration started actually one year before the DPLTA effective date and focused on three specific areas. First, the synergy realization, second, the joint organization and infrastructure, and the third, the joint business operation. We've made significant progress in implementing the planning that has been developed there.
Over the past year, essentially all of the work has been completed in the organization and infrastructure and the business operation integration streams, except for the large-scale IT infrastructure projects and the legal entity consolidation. Now the primary focus is really on the synergy realization towards the EUR 350 million target. In the next slide, I'll go into more detail on that. Here we see the synergy realization. A few quarters ago, we increased the original deal synergy estimate from EUR 300 million- EUR 350 million, and that will be realized three years after the delisting effective date, which is the first quarter of 2024. We are on track to realize that.
In the last quarter, we actually had got the forward-looking synergy run rates up to EUR 200 million, and this represents 57% of the total identified potential. The initial synergies that have been realized and implemented are very much in the areas of the OpEx, in procurement, and in manufacturing overheads. Looking forward, the synergies that still need to be realized are more into the manufacturing footprint consolidation as well as new product developments, which typically take longer. If we look forward in a year from now, a year or two after the DPLT effective date, we expect to be well over 70% of the synergy target that we have for the third year.
If I look at the cost of actually implementing the synergy realization, it is now at EUR 270 million, which is clearly lower than the original estimate of EUR 390 million. Now to give a bit more color on how we are progressing in what areas we have actually already implemented the synergy measures, which you see in the first column, and the areas where the synergy measures still need to come. If I look first at the pre-DPLT effective date, there were savings realized in especially the R&D area, where we discontinued the centralized innovation spend and also stopped the standard general lighting business, which was generating very low margins. A general lighting business also led to some savings already before the DPLT effective date in the COGS area.
Now if I look second at the SG&A area, a lot of progress has been made there. Over 80% of the reductions in most of the overhead functions have already been implemented. Also in the sales force, overlaps have been addressed, and we've really streamlined the marketing spend. Looking forward, the key areas where synergy measures are still to come is in the ERP consolidation area, where we're going from 7 ERP systems to two, and also into the consolidation of billing entities as well as legal entities. The related then overhead synergies to those simplifications. Now looking at the COGS area, the synergies realized a significant part of the materials procurement synergies have been realized.
Also in the area of quality, pretty much most of the actions have been implemented, and so on. If I look at what needs to still come in the COGS area, it's very much centered around the manufacturing footprint, which Mike will go into next, as well as then those kind of like productivity savings related to that optimized footprint. Finally, looking at the revenue area, the key areas in that have been implemented are very much first around distribution setup, in terms of pricing, but also in terms of channel optimization, as well as in cross-selling initiatives, in the cross-selling of existing products between the two companies' sales forces. That has all been implemented.
Looking forward, very much the synergies around new product developments need to come as it takes at least two years to develop a product and introduce it to the markets. With that, I'd like to hand over to Mike, who will go into the manufacturing.
Thank you, Mark. It's my pleasure today to talk to you about our manufacturing strategy and our footprint optimization activities. To cover a summary, I'd like to start in this section. I'll discuss our manufacturing strategy, the contributions that operations will make to the gross margin improvement that Ingo will cover next, and the plans to expand capacity to support our growth. These are the key areas I would like to highlight today, where we, one, focus on our in-house manufacturing on differentiating processes and products, as Thomas has so well showed you, as well as leveraging selected capabilities to create supply flexibility to support our customers. Two, leverage the multi-year continuous improvement programs that we drive for productivity, yield, and quality to not only reduce overall cost, but also to free up capacity to serve incremental demand.
Three, to drive initiatives to address key pockets of asset underutilization. Four, as Mark just stated, to realize EUR 120 million of COGS savings from the synergies and another EUR 70 million from further manufacturing footprint optimization. Finally, I'm very excited to cover our investments, including the expansion of our Kulim facility with a scale 8-in LED production capability. As stated, we have a focus strategy for in-house manufacturing. On this chart, you can see that in our wafer manufacturing, this includes III-V epi and production on 4-in, 6-in and 8-in wafers that we use to produce visible and invisible light LEDs and lasers, micro LEDs and ASICs, and specialty CMOS processes at 180 nanometers and up. In wafer post-processing, we produce phosphors, quantum dots, wafer-level optics, filters, optical coatings, and through-silicon via our TSV that's required for extremely low Z height applications.
In assembly calibration and test, we obviously focus on LED and laser products, wafer-level sensor and micro optical modules, and optical and sensor testing. To reiterate, our manufacturing strategy is to focus our in-house capabilities on where we can differentiate versus foundry or OSAT subcontracting options where commercial options are not viable from an availability or cost perspective. Lastly, where in-house manufacturing is required to be competitive, either from a margin stacking perspective or because customers strongly value our in-house capability for supply and the flexibility that comes with it. As Alex mentioned already, we focus on optical components, modules, ICs, emitters, and Lamps & Systems. As you can see in this overview, our technologies for each reside in different sites, and these locations have different investment needs and operational focus areas.
For optical components and modules, our key sites are in Singapore, and our focus there is to improve the utilization of existing capacity with investments only related to new products and technologies, and only if required. ICs are manufactured mainly in external foundries and also Prinshofen, with assembly and test primarily in OSATs as well, but also volume testing in Calamba. The strategy here is to continue the drive to make or buy and to be able to create that kind of flexibility going forward. For emitters, we manufacture in Regensburg and Kulim, we assemble and test in Malaysia and in China, and we invest to optimize existing capacity while we also expand capability for future growth needs. Of course, that includes a new state-of-the-art 8-in facility we're building for both LED and micro-LED products.
Lastly, for completeness, you can see Lamps & Systems are in various locations and driven by cost efficiency with very low investment needs in line with the economic model for that segment. Let's now move to the contributions that operations makes to the gross margin improvement that Ingo Bank will also cover later, with the first one being our continuous improvement programs. Every company in our industry has continuous improvement programs running to compensate for the typical annual price erosion. We have several operational improvement programs running in each of our facilities, next to a very strong focus on annual procurement savings. Over the past years, these programs have delivered significant results, as illustrated on this slide. With that, we typically offset ASP erosion we experience, as well as significant materials cost increases that we've seen over the past year.
There are specific accomplishments on this chart that I'd like to point out. One, yield and nonconformance cost reductions have been running at greater than 20%-25% over the last two years in all of our factories, and the contributions are significant, not only in cost, but also in creating more capacity to address our growth. Two, productivity and throughput gains driven by the above, as well as best practice sharing and lean methodologies are also quite significant. The third bullet I'd like to highlight is that the annual procurement savings have averaged greater than 5% in a supply chain where a significant portion of our spend is actually customer specific or customer directed. Okay? All in all, the teams have accomplished quite a bit, but let me kinda segue into the next area.
These are the initiatives to address the underutilization that we've seen. Ingo will show later that about 15% of the gross margin improvement that's targeted for the coming years is driven from addressing specific pockets of underutilized assets. The majority of the improvement will come from Singapore, where we will reduce from three to two sites. We'll move VCSEL activities to Regensburg, and we'll consolidate filter in Prunshofen. To be able to do that, we will then turn around and reuse Tampines for additional optical module programs that we expect to win that require the higher grade clean rooms than what we currently have available in Ang Mo Kio.
In Austria, despite seeing temporary underutilization in our front end there due to the COVID-19 effects and due to product mix changes, we're already back at full utilization again, thanks to our growing industrial and medical business. We'll actually be expanding capacity there to be able to in-source some of our foundry volumes and create that flexibility that our customers count on. Finally, in tests, we're further consolidating in Calamba, leaving only very specific test activities in Austria. As you can see on the chart down below, Regensburg, Kulim, and Penang are well loaded, and they're actually subject to expansion. The next area we will cover, okay. We'll talk about COGS synergies, where we have identified greater than EUR 190 million of savings that we can realize.
That breaks down into EUR 120 million from synergies between ams and OSRAM, and EUR 70 million, as Mark mentioned, from further Semis footprint optimization potential that we have identified. You can see the key elements of the synergies in the chart broken down by footprint synergies, portfolio focus, manufacturing overhead, purchasing, and other efficiencies. The synergies should be fully realized by Q1 2024, and we're at about 70% of that on a forward run rate basis already at the end of Q1 2022. Further optimization potential is expected to come after that, and should deliver another EUR 70 million of savings beyond 2024, primarily from footprint optimization. In the next slide, I'll go into the details of the Semis manufacturing footprint optimization, which relates to both the footprint synergies as well as the further footprint optimization slices of the pie that you see here.
Besides closing two sites, major savings come from consolidating specific manufacturing capabilities in one of the existing sites and consolidating and relaying out manufacturing flows into one building. Footprint savings are mainly driven by the consolidation of Singapore manufacturing into two sites by closing the Woodlands facility. It's our oldest facility in Singapore, I might add. We will also consolidate the Malaysian back-end production, which is today scattered over 12 dispersed buildings, into one new building in Batu Kawan, which is right across the bridge from Penang Island. We will also move the VCSEL production, as I've mentioned, to Regensburg, where it will enjoy significant manufacturing economies with the existing local operations. We'll consolidate our OSAT landscape by about 35% as we go forward to improve our leverage. In two particular types of manufacturing, one being LED, the other being CMOS.
We clearly run out of capacity in the coming years, and therefore we intend to, A, add that new 8-in front-end capacity facility in Kulim to support future LED and Micro LED demand and add C18 CMOS capability in Austria, as I've already mentioned, that will expand our capacity by approximately 10% to increase our make or buy flexibility. On the right-hand side of this, you'll see that our primary in-house manufacturing footprint, and you'll see what it looks like after we implement all of this. It'll be quite a bit streamlined. With the manufacturing footprint as presented, we'll be able to fulfill the expected 2x production volume growth that is required to deliver on the revenue outlook that Alex gave for the 2026 horizon.
The optimized footprint and production layout and scale effects are expected to result in a productivity increase of greater than 30% in indirect labor. It's significant. As mentioned before, the overall annual cost savings should add up to greater than EUR 100 million, of which greater than EUR 30 million is part of the OpEx synergies between ams and OSRAM. Significant gross margin expansion is expected from establishing a best-in-class manufacturing footprint by 2026 by applying the ability to create scale. The facilities will have optimized production flows. One, in particular, will be highly automated, as Thomas pointed out. Y ou'll also see this gross margin expansion from the shift from 4-in and 6-in to mainly 6-in and 8-in LED production. You'll see a significant mix shift to low-cost countries while we maintain a strong presence in Europe.
We expect to be the first company, as Thomas mentioned, to ramp a scale 8-in LED front-end facility in 2024 that can produce both high-end, high-power LEDs as well as micro-LEDs. Finally, with the moves away from some of the older sites and into newer and larger facilities, ams OSRAM will make a significant step in meeting our longer-term ESG goals. I'd like to cover Kulim a little bit further now. In 2019, when ams first launched its bid for OSRAM, Kulim represented a synergy opportunity to either reuse the available space or to repurpose the site. Kulim at that time was mainly focused on the standard general lighting business, which we intended to stop. Since we have been steadily transferring high-volume auto LEDs from Regensburg into Kulim, we have been filling the factory.
The capacity then available in Kulim and Regensburg actually allowed us to support the surge of demand that we saw for high-power LEDs in 2021 and not just the recovery of the automotive business post-COVID. The continued significant volume growth in a diverse set of SMI's growth areas, as was presented by Alex, requires capacity expansion beyond the available space in the midterm. As already stated, we intend to support this extra LED volume growth, as well as the volumes projected for our micro-LED program with a leading-edge 8-in front-end facility for LED and micro-LED production located in Kulim. I'm pleased to tell you that building construction has started recently to allow for the extended lead times that we see in the construction industry these days.
In summary, we've covered our manufacturing strategy, our plans to address the remaining pockets of underutilization through a combination of consolidation and new business, how we're performing and meeting our COGS targets, both from a synergy and from a footprint perspective, how we're combining all this and adding new facilities to meet our projected growth, and finally, how our manufacturing strategy will contribute to our ESG goals. With that, I'd like to hand it back over to Mark.
I will now go into our portfolio management approach, our M&A strategy, and the current progress being made on the divestments that we have announced. First, looking at the portfolio framework, we very actively manage our portfolio of R&D investment opportunities. The primary focus here is on achieving market and technology leadership positions in the segments that we serve because this typically delivers then leading-edge profitability in that segment. Next to that, we aim to maintain a healthy distribution of businesses along their life cycle so that actually the proceeds from well-established businesses can be used to fund the new emerging and growth opportunities. If we look at our current distribution of business across this framework, we currently generate around two-thirds of our revenues from businesses where we enjoy a leadership position, market and/or technology leadership.
We also invest over 71% of our R&D in emerging our growth businesses, and this is important to support our long-term double-digit revenue growth target that Alex talked about. I'm going here into the M&A strategy. M&A is a key strategic tool for ams OSRAM, and we've actively used this over the past year. Our focus is to acquire companies that strengthen or add technology capabilities required to deliver best-in-class optical solutions, which then leverage to drive autonomous growth. The examples here, for example, mentioned by Alex, is the Heptagon and the CMOSIS and the Princeton Optronics acquisitions, where at acquisition, the businesses generated about EUR 150 million in revenues, and within a couple of years, that was over a billion in revenues.
If I look at the second lever, it's around acquisition of typically smaller companies, very much focused at expanding our capabilities to deliver full application solutions. You see three examples here of software companies that we acquired. Next to acquisitions, we also very actively divest businesses that do not fit our long-term strategy, and I will go through some of the examples there. On the left-hand side, you see four examples of businesses that we divested as ams before the OSRAM acquisition. On the right-hand, you see the divestments we're now pursuing after the OSRAM acquisition. On the next slide, I'll give an overview of the progress that we're making there. On this page, you see the scope of the Lamps & Systems segments that we report on.
If you look at the businesses within that segment, there are two businesses we retain, specifically in the lamps business, and this is the automotive lamps business and the entertainment and industry lamps business. The revenues of those businesses together were around EUR 0.9 billion in 2021, and actually then already generating a double-digit adjusted EBIT margin. On the right-hand side, you see the systems businesses that we are divesting. We're pursuing the divestiture in seven transactions because for each of those transactions there's a different kinda like buyer landscape, and by doing this in this fashion, it might be more work, but you get a much better proceeds from the transactions. In terms of progress made, we already announced four deals, of which we have already closed two. Now forward-looking, there are three more to come.
We will be announcing and closing those transactions in the rest of 2022. If you look at the overall businesses that we're divesting, they represent EUR 0.8 billion of revenues in 2021 as reported. Two businesses actually, divestitures actually closed already during the year of 2021. The actual annualized revenue run rate of those businesses that we're selling was around EUR 0.95 billion. If you look at the financial contribution of those businesses, they actually contributed negatively to the adjusted EBIT in 2021. Now, going to the proceeds. We expect to get proceeds in the range of EUR 500 million-EUR 600 million from these transactions in total, and we're well along the way there with the announced transactions already generating more than EUR 450 million of that number. With that, I would like to hand over to Ingo, our CFO.
Now that you've seen Alex outlining the growth opportunities and the potential of the company, Thomas speaking to the strong technological capabilities we have now under one roof, Mark just updating you on the status of the integration, the synergy realization, and the divestment, and Mike formulating our industrial strategy and our operational focus areas, let me now bring it all together, financially speaking. Before I do that, a brief look back at some of the major accomplishments over the last 12 months since taking control. On the financing side, it is worth to mention that we delisted Osram Licht AG, and we increased our stake to more than 80%. We restructured our funding setup with a core set of banks, and we kept the leverage consistently below two, also supported by our strong operational cash flow at 16% of revenue.
From an integration perspective, it is important to note that we are today at a 57% run rate of synergies and savings while on track to achieve our goals. We harmonized the accounting principles, our calendars, and put a joint performance management approach in place. We established a common HR information system, implemented a joint customer relationship management application, and as we speak, are in the midst of the rollout of one ERP system per segment. A lot has been accomplished, and our teams have done a fantastic job in the first year of being together, and a big thank you goes out to them. Let me now change perspective and start looking forward. Here you see an overview of the agenda that I will cover with you over the next 20 min. Let me start with the targeted financial model of the company.
To the left side, you see the targeted financial model for the group. It's not new, and the key metrics of 10% or more revenue growth and 20% of adjusted EBIT or more have been communicated before. Also, we've mentioned a few other key ratios in the past as well, SG&A and R&D, for instance. Important here is to understand that our two segments will both contribute to this group model, but in different ways based on their distinctive economic models. Let me now start with the economic model of the Semiconductor business to the upper right of this slide. We expect the Semiconductor segment to have a revenue CAGR of more than 12% operating and an adjusted EBIT margin of 20%-25%.
The growth will be largely driven by R&D and CapEx investments, and of course, the margin contribution from assets utilization and optimized industrial footprint is something that Mike just outlined. The Semiconductor business will, of course, also benefit from the realization of the synergies and a lean SG&A setup overall. If you move down to the Lamps and Systems economic model, we have to imagine a business post-divestments that is largely a lamps business. It will be a market leader in a low-growth environment, expecting to operate in an adjusted EBIT of between 12%-17%. Just for reference, the comparable business was operating at around 10% already in 2021. We see here an opportunity to grow the aftermarket business and improve some of the SG&A productivity overall.
It's a business with low investment needs and a low operational asset base, so a nice recurring revenue business with good margins and good cash flow, and will be managed as a business and targeted to improve its return on invested capital through margin management and a strong focus on cash flow. Today we are confirming the targeted financial model for the group with 10% growth or more and 20% of adjusted EBIT or more. The two segments will both contribute to the targeted returns based on their own economic models, which is also driven by their respective market leadership positions. Now the question of course is how do we get there over time? What are the key drivers? Let me now walk you through that path, the path to value creation, focusing on the margin expansion.
When we look at operational profitability improvement overall, gross margin and OpEx efficiency are two key elements. Let me now start with the adjusted gross margin. In 2021, we ended the year with 34%. For us to get to the target at 40%+, we have six clearly defined drivers. You see them here in the middle in the pie chart, and let me walk you through each one of them right now. Starting with the divestments. The businesses that are being divested right now operate at a lower structural gross margin percentage than the group overall. We do expect post divestments a structural improvement that should contribute up to 35% of the anticipated gross margin improvement over time. On the cost of goods sold synergies, Mark and Mike already provided you an update and gave you examples what we're doing there.
Some we have already realized, for instance, in procurement, but there's more still to come. Overall, we expect that contribution to be roughly 20% of that margin expansion over time. On the semis footprint, moving to the left of the pie chart, this is what my colleague Mike Lusk just now outlined, and it has to do with increased asset productivity and a consolidated and optimized footprint setup for the company. On the asset utilization, you heard Mike Lusk speaking about pockets of underutilization, particularly in Singapore right now. Also here, we expect a contribution of about 15% up until we reach that 40%+ targeted gross margin. We do expect some improvement in our business mix, up to 15% of contribution. O f course, there will also be headwinds, inflation, price erosion, stranded costs, to name a few.
We assume that we will not be able to offset all of them through operational excellence measures despite the strong track record we have in this area. Overall, six clearly defined and understood drivers of adjusted gross margin expansion over time. Next to the gross margin expansion we just went through, and you see how big the contribution overall is when you look at an adjusted EBIT improvement over time. We now need to spend some more time on the next important building block in that respect, and that's OpEx efficiency. Let me start also here with the divestments. Next to the expected gross margin percentage benefit from the divestments, we do also expect an additional SG&A benefit from it. The businesses we are divesting are structurally operating at higher relative SG&A costs than the group average.
This positive structural impact post-divestment is expected to contribute around 5% of the difference in operational profitability percentage improvement. On the SG&A synergies, which make up 40% of the overall targeted synergies, we have already realized some, and some are reflected already today in our P&L, and more is to come. Mark showed you what these are and what we're working on. Here we expect a contribution of around 15% to the overall adjusted EBIT margin improvement over time. Then finally, with the anticipated growth, we do of course expect a positive leverage effect on our OpEx structure. There's actually quite a number of integration activities that are geared towards increasing the scalability of processes in the SG&A area as we speak. In summary, overall, a very clear path of margin improvement.
The building blocks are clear, they're defined, they're owned, and we track them. What is the current status of executing these building blocks? What is some of the timing of those drivers and their contributions to the margin expansion path over the years? On the divestments, Mark already provided you an update. We expect the first full year effect in 2023 on the divestments, net of some stranded cost headwinds. On the synergies, we're making good progress and we're on track. Regarding revenue synergies, we see further potential beyond 2024. Our CTO, Thomas, already showed you a number of exciting opportunities resulting from our running development activities. On the semis footprint, the asset utilization, and the OpEx leverage, we expect some benefits in 2022 and 2023.
The full momentum of the contributions from these drivers is expected to start kicking in from 2024 plus onwards. Overall, we have a very clear picture of the drivers and also when we expect their full respective contributions to come in over time. With now a bit more than a year in control and the investments and synergies on track, we believe it's appropriate to provide you with our current view as to a mid-term set of financial targets for the company. Looking at the year 2024, we need to of course bear in mind that the revenue impact from the divestments that Alex already indicated is about EUR 800 million we will lose from our top line initially. The various growth drivers, short and mid-term, that Alex showed you early in his presentation, will benefit and contribute to this target.
Of course, the elements of the adjusted EBIT improvement path that I just outlined and their respective expected timing of contribution as well. On that basis, for 2024, we expect a revenue of approximately EUR 4.9 billion, EUR ± 300 million. We do expect 2024 to be the first year with a double-digit revenue growth run rate year-over-year, and an adjusted EBIT of 15% or better. For the sake of clarity, let me also point out that expectations and targets are based on ams OSRAM's latest reasonable assumptions and information. They do not include potentially material effects related to the development of the current or to any other future geopolitical risks. With these future improvements and targets in mind, let's now look at the capital allocation priorities of ams OSRAM.
As you will notice from the overview here, our capital allocation priorities have not changed compared to what we communicated before. First is to support the generation of profitable growth. This, among other things, entails supporting R&D spend of between 11%-14%. CapEx is important, and I will come back to that in more detail in a minute. We will continue to invest into the integration and the realization of the synergies. Here we spend approximately 30% to date of the expected EUR 270 million of one-off integration expenses. We continue to work on the balance sheet. We expect to retire $320 million worth of a convertible bond this year. Our high-yield bonds will be revisited in late 2023, early 2024, while we continue to focus on our operational cash flow generation.
Finally, from our shareholder capital return policy, we're focusing on structurally establishing an investment grade rating over time. I will come back to the OSRAM minority shareholder situation later on. Overall, a very clear set of objectives and priorities. Let's now take a deeper look at one of the important growth-related priorities, CapEx, both longer term, but also for 2022 and 2023. As we take the industrial strategy, the footprint optimization, and our growth objectives in mind, we do expect to spend on average 10% of revenue through a cycle. Approximately 1%-1.5% is capitalized R&D, around 3%-4% should cover base investment needs, and 5%-6% to support growth, technology innovations, investing in differentiating capabilities, both front-end and back-end.
Let me point out also that this 10%, of course, is an average ratio, which means there will be years where it was less or will be less, like it was the case in 2020 and 2021. There will be years where we will spend more than this average. Clearly, by looking at the focus areas here on this chart and referring back to what Mike outlined earlier, particularly us building the first state-of-the-art eight-inch LED front-end facility over the next 18-24 months, in combination with other investments, our CapEx is expected to be markedly higher over the next 18-24 months. For 2022, we expect it to be around 15% on a like-for-like basis, i.e., when I refer back to our 2021 revenue level.
For 2023, we expect it to be above 20% on a like-for-like basis, again, when I relate the spend back to our 2021 revenue level. We then expect to come back to normalized levels in 2024. Let me also add that with the new LED fab investment, we're covering well the demand time horizon that we've shown earlier today, so well into 2026. Let's now move towards the balance sheet. Here you see a more recent development of our net debt position and the group's debt maturity profile down the left. On the top chart to the left, one can observe that over the last five quarters, both our net debt position and leverage have been very stable. Further down in the chart to the lower left, you can see that our debt maturity profile is well structured.
I already indicated our current plan to retire the $320 million convertible bond, which is due in September of this year through existing cash, thereby reducing our gross debt position further. A rolling credit facility of EUR 800 million is in place and remains undrawn. Given the current interest rate environment, it is important to point out that our exposure is very limited, given that our financing is by and large based on fixed rates. Overall, a solid setup. Let me now spend a few words on the OSRAM minority shareholder situation. The DPLTA put option for OSRAM shareholders remains in place. These shareholders receive an annual fixed payment of EUR 2.24 net under the DPLTA. The first of such payments is due this year. At this point in time, acquiring additional OSRAM shares is not a priority for us.
We have full operational control and are successfully integrating the company as you've already seen today. Let alone the currently prevailing economics do not create an economic incentive for us to acquire more shares. One other noteworthy point to mention is that selected groups of remaining shareholders have started appraisal proceedings. This is very typical for takeover transactions in Germany, and based on historical precedents, this may take up to five years to be processed by courts. Overall, not a priority for us. Let me now come back to the investor value proposition that Alex showed you earlier in the beginning. Here you see the five pillars of our value proposition now also with the clear targets next to them. On our commitment to growth, we outlined the growth drivers and the opportunities, the exciting technology capabilities we have.
We've shown our willingness to resource those growth opportunities with sufficient R&D and investments to realize our targeted growth of 10% or more. We will spend more time on our growth after the break when we deep dive into our key markets. We showed you the building blocks to achieve our goal of an adjusted EBIT margin of 20% or better, and their expected timing. The building blocks are clear, they're specified, they're owned, and they're tracked. We will continue to refine our business mix. We are targeting equal weights for our automotive and consumer businesses, complemented by industrial and medical. We plan to do this with a share of our top 10 customers of around 35%-40%. We pursue a prudent financial policy, targeting investment grade over time, and we have clear capital allocation policies in place. We focus on long-term value generation.
We are committed to do this in a sustainable way, targeting carbon neutrality by 2030. We strongly believe in the benefits of diversity and inclusion, also beyond gender diversity. Our very clear value proposition is underpinned by specific targets and specific plans to help us get there. Before I move into the break, let me spend some time with you on the company situation with respect to the war in Ukraine. The top priority right now for us is the safety and security of our employees and their families. We halted all shipments and are fully complying with the sanctions. At this point in time, we evaluate the direct economic impact for the company to be rather immaterial, as the related revenue is smaller than 1% of the group's revenue on an annual b asis.
We do not have any production or any other major facilities in Ukraine or Russia. We do expect indirect impacts likely to outweigh the direct impacts. However, it is impossible to reliably quantify the exact overall financial impact for us right now, also given the ongoing war. Possible supply chain consequences are fully understood and being addressed where it was required. Now we will be moving into a small break before we then take a deeper dive into our key end markets and their growth potential for us. Thank you.
Welcome back after the break. We now start with our key markets, and let me start with the automotive part. We see four major trends in our automotive industry, from electrification over digitalization, autonomous driving to comfort and safety. These trends are driving new opportunities in the area of illumination, visualization, and sensing that we are shaping with our technologies at ams OSRAM. Important driver for our established businesses are, for example, implementation of LEDs, increased penetration of adaptive beam steering, both holding significant growth potential going forward. There are some amazing new growth drivers such as smart surfaces, car becoming a third living room, or the increased use of lidar sensing. ams OSRAM covers a wide range of illumination, visualization, and sensing applications with a broad semiconductor portfolio.
This broad offering allows us to come up with an optimal solution depending on application and customer needs. Strong base in our established businesses continue to take over from, let's say, traditional light sources. The same is true for sensing applications. We can offer a combination of IR emitters and respective sensors, optics for optimal results, e.g., in in-cabin sensing.
For exterior sensing, ams OSRAM is a full portfolio provider for lidar, illumination, working with our customers for the ideal solution for their respective architecture, offering both edge-emitting lasers and VCSEL light sources. Looking now at some of our key markets, we are holding a very clear market leader position in major areas. Very strong foothold in automotive LED lighting, both in exterior with forward lighting and signaling. Also interior with functional illumination or ambient lighting. We are the number one for sensing applications. For example, lidar or in-cabin sensing. In addition, there's areas which we want to tackle. For example, make the display backlighting a strategic initiative. Growth coming from a wide range of applications. Our established businesses, we have already significant revenues today, provide further growth opportunities.
Midterm growth from a number of new applications, for instance, dynamic forward lighting, which will take off from 2023 onwards, or in-cabin sensing, which will be supported by legislative requirements. Also, looking further into the future, there are important growth opportunities. For example, smart surfaces or lidar, which has seen some push outs in the past year, but we are certain that driven by automated driving and later autonomous driving, lidar will get implemented. Our addressed automotive market grows with 7%-10% CAGR between the time frame of 2021 to 2026. We have a stable part of the market with today's established businesses. The market for our growth application, on the other hand, will show a strong growth of 25%-30% CAGR. Key growth drivers are feature penetration for growth markets.
We will also focus on the very high end of the cars and up to the mid-range. Growth is more driven by the vehicle production volumes. The increased penetration and the more sophisticated technological solutions result in a higher content per car. In particular true for the high-end vehicles, where the innovation solutions penetrate first, and we expect a strong content increase. Then they will trickle down to the mid-end with still significant expansion. For low-end, average sample vehicle will show a more limited growth, but still expand quite nicely. Increase in penetration is a key driver for growth in many established and emerging business areas. On top of the light vehicle production, even for headlamps, LED penetration in 2021 was just above 50%, which gives us sufficient room for further growth. Similar situation in rear lights and signaling.
Very strong increase in penetration expected for in-cabin sensing driven by regulation. Lidar is only taking off at a later stage with the penetration going up to 3% of the total light vehicle production. In the following pages, I'll guide you through some exciting examples. Exterior lighting and headlamps is an important topic for us, where we lead in today's established businesses and innovation. LED lighting for headlamps is undergoing a significant, very significant evolution. First, replacement of basic halogen functionality, switching on and off. Second, adding new functionality that could be only realized with LEDs, adaptive beam steering based on a matrix of multiple discrete LEDs. Next step, a high-resolution pixelated headlamp that offers both adaptive beam steering paired with projection functionality. How does this look like?
An integrated product, you have already seen this picture in Thomas' slide, with a single monolithic structured LED chip with more than 25,000 pixels paired with a highly specific IC drivers. You can clearly see that here, in order to build this product, yeah, you need to have the full value chain under control, and we are the only player with all the required in-house capabilities, including the driver IC and also the whole packaging competence. Our platform, EVIYOS, is leading versus competing technologies on key, very key performance criteria, e.g., energy efficiency, system size or system cost. Now, we will show you a short video about our EVIYOS platform.
Imagine a future where roads are safer for everyone. Introducing EVIYOS 2.0 by ams OSRAM. Intelligent forward lighting enables visualization and illumination at the same time. A base unit offering a wider field of view and a spot unit for narrower targeting work in harmony to provide the ultimate in precision lighting. Over 25,000 smart pixels on a single LED chip can target and illuminate the exact areas of the road you need to see and nothing else. EVIYOS can illuminate and communicate critical visual information to the vehicle and to the driver. High resolution warning projections can give you the time you need to respond to a sudden obstacle on the road.
Adaptive and smart, EVIYOS provides permanent glare-free high beams by automatically switching off the appropriate pixels as soon as oncoming traffic is detected, maximizing visibility for you while eliminating glare for oncoming drivers. When outstanding resolution meets unmatched precision, we get a brighter, safer future for everyone who shares the road.
Now coming to in-cabin sensing. In-cabin sensing, another good example with high growth potential for ams OSRAM. Different applications that are being addressed, driver monitoring, gesture sensing, or interior monitoring. In addition to the market requirements, the increased penetration of in-cabin sensing application is driven by expanding regulatory requirements, creating a strong boost for this market. Will driver monitoring be mandatory in Europe for new cars from 2024 onwards? Changes in regulations are also expected to follow for other regions, for example, China or the United States. ams OSRAM is the market leader in the emitters for in-cabin sensing. We are the only one who's able to provide both the infrared LEDs and VCSEL, which brings us in a unique position to be the partner of choice for the industry.
We're able to differentiate in both technologies with leading performances and a broad portfolio tailored to suit our customer needs. We are the number one infrared LEDs to enable all 2D applications in all regions, where our lens and packaging technology offers a strong benefit for the customers. In VCSEL, we are leading automotive qualified illuminators and in-house solutions with the best-in-class performance, powering both 3D iToF systems for gesture HMI and 2D cabin sensing in both Europe and Asia. Moving on to lidar. Another good example where we're ideally placed to profit from a strong market growth. Widely known, the lidar growth has been pushed out compared to earlier expectations, but growth and penetration is only delayed and not in questions. We are right now defining with key OEMs the technologies and suppliers and have confidence that the market will come as already outlined in the projections.
ams OSRAM also for lidar is uniquely positioned in the emitter space. Very clear that edge emitters and VCSEL will cover the vast majority of the market until end of the decade, and with a full portfolio for these architectures. Expectation in these market numbers is two lidar systems per equipped vehicle by the year 2026. Also in lidar, ams OSRAM is the only player who can offer the full portfolio, spanning edge emitters and VCSELs. Market-leading in lidar edge emitters, wide range wins, outstanding track record for supplying edge emitting lasers, already delivered more than 20 million lasers to the automotive industry, and with 300 billion kilometers without chip failures. High output power in the market, highest reliability, and automotive qualified SMD package.
For VCSEL, we are first to market with multi-junction addressable arrays supported by in-house manufacturing, and we have more than 20 years of design expertise for these emitters. Multifunctional user interfaces are a fascinating area of innovation that provides plenty of opportunities for ams OSRAM. Light sources, driver ICs, and sensors are combined in smart surfaces that allow novel applications. Smart surfaces will be used in many, many areas inside the car. Potential examples range from the middle console, the steering wheel. Again, ams OSRAM has a complete offering light emitters, driver, sensor capabilities to drive this trend. We are also open here to drive in this ecosystem based with key partners in the industry. Here, key takeaways from the automotive market segment. We are the number one in the majority of served automotive applications, creating an attractive margin profile and business.
Same growth for 2021-2026 of 7%-11% CAGR, fueled by the automotive megatrends which ams OSRAM expects to outgrow. A very attractive mix of shorter and longer term growth drivers. Key growth drivers, dynamic forward lighting and signaling, interior ambient lighting, LCD backlighting, in-cabin sensing, and lidar. Longer term growth from smart surfaces and also Micro LED displays and advanced head-up display solutions. We will continue to be the innovation leader with differentiated offering in each of these key drivers. Now I will hand over to Jennifer, my colleague, for the consumer space.
Thanks, Robert. Let me continue with the consumer end markets. First, let's take a look at the three major trends in consumer that are driving current and future opportunities in sensing, illumination, and visualization. In the mega trend of digitization, we see strong adoption of camera enhancement features in smartphones, which includes auto white balancing for better contrast and laser detect autofocus for sharper images. Also, AR/VR use cases are emerging. For visualization, we see more and larger displays with more attention for true color representation with ambient color temperature correction based on advanced spectral sensors. The next trend is more and smarter devices. For example, we see wider adoption of vital signs monitoring wearables such as smartwatches and wristbands, smarter LED flash illumination solutions to improve picture quality when using the flash. In visualization, the introduction of near to eye projection technologies for AR and VR glasses.
For energy efficiency, sensors like on-skin detectors are introduced to smartly switch on and off the devices when they're worn, but not when on the table or in your pocket. For visualization, we foresee the adoption of power-efficient Micro LED displays, which will replace OLED in many applications. Let's take a look at significant content opportunities for optical components and sensing solutions in mass market devices, including smartphones, tablets, notebooks, and wearables. On the user-facing side, Micro LED displays will emerge first in wearables, and display management content is growing with behind OLED ambient light, color, and proximity sensing. On the world-facing side, flicker detection, spectral color sensors, folded path optics, and single and multi-zone time of flight solutions enable better camera performance. Emerging 3D AR sensing requires optical components, direct time of flight modules, and near-infrared image sensors. Authentication is enabled by 3D sensing components.
For wearable devices, vital sign monitoring requires LED or VCSELs with different wavelengths, photodiodes, temperature sensors, analog front ends, and modules. On-body tracking requires smart proximity sensors. With more and better features in these high volume consumer devices, higher content opportunities are created for ams OSRAM with our broad optical solution portfolio. We have established leadership positions in most of the major consumer markets. For example, we are the number one player in ambient light sensors. We're the preferred supplier for most major OEMs, and are still winning market share with advanced behind OLED and tiny in-bezel solutions. We have top three position in 3D sensing and camera enhancements with our spectral color balancing and time of flight-based autofocus portfolio.
We're number two in vital signs monitoring and continue to gain share now that we are able to offer a complete solution for both discrete components and modules with the ams and OSRAM integration. Now, let's look at the key growth drivers for the consumer market. We're already quite established in behind OLED display management, such as ambient light sensors and optics and proximity sensors for wearable devices. For short to mid-term growth, we see continuous opportunities in 3D sensing and camera enhancements, while they're being adopted by more OEMs and vital signs monitoring in more smart devices. Our emerging growth drivers will come from Micro LED displays, adoption, and AR/VR glasses. I'm very excited about Micro LED display technology.
As was covered by Thomas in the CTO session, I'll focus on the deep dive of the other three growth drivers in my presentation, 3D sensing and camera enhancement, vital signs monitoring, and AR/VR glasses. How big is the consumer SAM? We have attractive addressed markets for consumer markets. In 2021, the market was at EUR 2.9 billion, with ambient light sensing, proximity sensor, and VCSEL illumination already widely adopted. We foresee double-digit growth at a CAGR of 15%-20% for the next four years. Significant growth will be driven by new applications and technologies such as camera enhancements, AR/VR glasses, and Micro LED with CAGR of 20%-25%. Established market will have low growth due to its maturity. We expect to grow faster than the market by winning market share.
Now let's take a deeper look into the three key growth drivers. The first is 3D sensing and camera enhancements. Key applications in this area are direct time of flight depth sensing for autofocus and bokeh for depth of field effects and sharp images, especially in low light conditions. Artificial light flicker detection to eliminate modulation effects for indoor photography. Spectral light sensing for auto white balancing for better contrast, also in low light conditions. Folded path optical elements enabling deeper optical zoom in thin devices. Lastly, emerging AR applications like Snapchat, 3D lenses, navigation, and gaming. These applications in 3D sensing and camera enhancements lead to a total of 9%-13% CAGR in our addressable markets. Camera enhancement, such as spectral light sensing, flicker detection, and folded path optics, are high volume and high value applications. We see wider adoption of these features in many OEMs.
This segment also shows high growth with 13%-17% CAGR. World-facing 3D applications are emerging. We see strong growth in the next four years with autofocus, bokeh, and other AR applications in the premium segments with a CAGR of 40%-45%. User-facing 3D sensing will have limited adoption. Our growth, first of all, will be driven by camera enhancements where there is clear demand for such features. Secondly, it will be driven by world-facing 3D sensing as more use cases get adopted. For example, use cases using direct time-of-flight for autofocus and bokeh effects. We're leveraging our optical solution leadership to address these growing applications. For example, our multi-channel spectral color sensors enable the highest DXOMARK scores for camera performance for some smartphone OEMs. Now, let's look at the second growth driver, vital signs monitoring. Health monitoring on the body requires multiple interdependent components.
Emitters like LED or VCSELs of different wavelengths to penetrate the skin at different levels. Photodiode receivers to capture the reflected signals. Analog front ends to drive emitters and collect data from receivers. Optical simulation and algorithms to provide a wide variety of health data from the original signals. We own the complete solution after the ams OSRAM integration, so we can address system issues like energy efficiency, which plays a big role in the deployment of 24/7 vital signs monitoring solutions. By building reference designs of complete systems, where we, for example, balance the emitter and receiver power while adapting the algorithms, we can optimize the form factor and power to fit anywhere on the body, including wrist, ear, chest, and head. With integration of ams and OSRAM, we're uniquely positioned to win because we cover all elements required for vital signs monitoring solutions, which no other player does.
We offer individual components as well as multiple layers for integrated modules. For example, we offer discrete LED and receivers, which can be combined into optical front-end modules. We also offer standalone analog front end, and when needed, we combine it with optical front end to make fully integrated modules. In addition to hardware, we also offer algorithms for various vital signs which are developed both in-house and with medical certified partners. We're leading the innovation in blood pressure, body temperature, and hydration, and are looking into multiple additional vital signs. For this application, we started with smartwatch and wristbands, and now are expanding into newer devices such as earbuds and smart glasses. This leads to the third growth driver in consumer, the exciting world of virtual and augmented reality. Let's take a look at what technologies are needed in smart glasses.
First, near-to-eye display technologies like laser projectors, Micro LED displays, and associated optical components like waveguides are key growth and value opportunities. 3D and 2D sensing are key technologies for AR/VR devices for seeing and interpreting the world around them. Reliable and fast eye tracking is extremely important for optimized rendering, tracking, and natural depth of field experiences. Here, low power, very small scale, and high-performance solutions are required. 3D hand and body tracking is key for users to naturally interact with objects in the virtual and real worlds without the need for extra controllers. Of course, vital signs monitoring will be a key function of smart glasses. Overall, smallest form factors and complex optical performance must be achieved to create compelling devices. On top of that, energy efficiency is critical to have all the functions working in these glasses with a size that's attractive to consumers.
In today's smart glasses market, either the experience is good but the devices are bulky, or the device wearability is good, but they offer limited experience for users. This is a result of many technical challenges to achieve the optical performance and energy efficiency needed with space constraints. To enable broad consumer adoption, ams OSRAM has been developing multiple proprietary technologies to achieve the balance of features and size, the sweet spot for wide consumer adoption. For example, we have developed a projection engine that integrates RGB lasers, driver ICs, and optical path in a tiny package as small as 0.7 cubic centimeter, compact enough to fit in standard consumer fashion frames. We have innovation in optical combiners that have a five to 50 times better efficiency than today's waveguides.
We're working with key customers on eye-tracking solutions with tiny lasers and imaging components that have lower power and high accuracy. All these place us in a unique position to win in this fast-growing market. In 2021, number of AR/VR glasses sold was around 9 million units. The forecast CAGR is 30%-40% for the next four years. After initial VR headset adoption, consumers are expected to drive the AR glasses market in the later years when technology is mature enough for broad consumer acceptance. In addition to unit growth, we also see ams OSRAM's addressable content per unit increase from EUR 15- EUR 20 to around EUR 50 due to our continuous innovation.
Our portfolio and roadmap of emitters, image sensors, and optics, coupled with in-house high-volume manufacturing capabilities, put us in a unique position to win in this high-value and high-growth market. We're already engaged with leading tier one OEMs who recognize our optical knowledge, portfolio, and mass manufacturing capabilities. Let's watch a short video on AR/VR glasses.
Augmented and virtual reality applications are on the rise in industry and consumer markets. Seeing the world in a new light is only possible with outstanding miniaturized lighting and sensing solutions. Our comprehensive technology portfolio of highly precise components enable all kinds of AR/VR functionalities, such as hand and body tracking, eye tracking and authentication, vital sign monitoring, 2D and 3D sensing and display management. They facilitate a broad range of world and user-facing applications, such as near to eye projection, for which we offer specialized light sources and waveguides, as well as emerging technologies on the basis of holograms to achieve efficient projection onto the surface of the glasses.
For eye tracking applications, we offer specialized sensing capabilities coupled with the required light source. We also offer ambient light sensing solutions and proximity sensing. ams OSRAM is your co-creation partner for realizing outstanding user experiences. Let us sense the world together, since for us, sensing is life.
Hope you enjoyed the video. Let me summarize the key takeaways for consumer market. We're leading today in most consumer segments and expect an addressable market growth of 15%-20% CAGR in the coming four years. This will be driven by new applications like AR/VR smart glasses we just saw, new features like 3D sensing and camera enhancement, and new exciting technologies like Micro LED. We have a broad and balanced portfolio addressing both shorter and longer-term growth opportunities. Today's key growth drivers are 3D sensing and camera enhancements behind all our display management and vital signs monitoring. Longer-term growth is driven by sensors, illumination, and visualization in AR/VR glasses and Micro LED display adoption. In conclusion, ams OSRAM is the innovation leader with a differentiated offering for each key growth driver in the consumer market. Thank you. I'll now hand over to my colleague, Jens, for industrial medical markets.
Thanks, Jennifer. Let me continue with the next end market section, industrial and medical. It is important to have in mind that both companies, ams and OSRAM, have a long-lasting, successful track record in industrial and medical applications. Combining these competencies of both companies leverages additional value and enables ams OSRAM to address the mega trends in the industry and medical markets. These mega trends are smart health, Industry 5.0, urbanization, and energy efficiency and sustainability. With our technology competencies in illumination, visualization, and sensing, we shape these mega trends by developing innovative products and systems for selected applications. As a result, this provides a lot of growth opportunities for ams OSRAM.
As the market for industry and medical is diversified and fragmented, it is important that we focus only on the most attractive applications in which our technology has a clear differentiator, and we deliver outstanding value for our customers. For example, with our sensing capabilities, which you see in the third column, we enable several applications for the requirements of smart health, like CT photon counting and point-of-care diagnostics. With our illumination capabilities, which you see in the first column, we enable applications that contribute to an increasingly sustainable world, like in horticulture, where we enable growing plants through artificial light, and disinfection through innovative UVC LED technology. If you have a closer look to our served applications, it becomes obvious why ams OSRAM has a unique value proposition. Because the customers for our applications require more and more combination of illumination and visualization capabilities.
We have the right products for our customers in both areas. Let's take UVC disinfection, for which ams OSRAM offers the LEDs to remove germs, and in addition, with our sensors, we can prove that the germs are really gone. Another example is projection, which can be done by LEDs or by lasers. We are the only company offering both technologies. Home and building automation, point-of-care diagnostics, robotics and drones, as well as medical imaging are the main focus applications for our sensing components. We provide different sensor technologies for these markets, from image and spectral sensors, to touch sensing and CT detectors. To sum it up, the industrial as well as the medical end markets are strong examples for the synergistic portfolio of ams OSRAM. This is a strong differentiator.
The result of our combined and differentiated offerings is reflected in the strong market position in each of the shown applications. We are a number one or a number two player in most of our addressed markets. For example, we are number one in horticulture, LED projection, medical imaging, IR vision LED. These market positions, our synergetic capabilities, and our differentiating product offerings are the foundation for further growth. This growth of our industrial and medical business is provided out of a balanced portfolio. Firstly, we expect solid growth in our served established application. For example, in home and building automation or robotics and drones. In addition, we benefit from present growth drivers like horticulture as well as projection. Last but not least, also emerging growth drivers like UVC, micro cameras, or point-of-care diagnostics contribute to growth in our industrial and medical business.
Those three areas are all at an early stage of market growth, and ams OSRAM is able to shape this market through our differentiating product offerings. Our strong and balanced growth potential becomes also visible looking at our SAM. That is our addressed market. It had a size of EUR 4.7 billion in 2021 and grows with an average CAGR of 10%-14% until 2026. In gray, you see the portion that shows our established growth applications. Here, market growth is driven by making applications smarter and more and more connected, and by the benefits of the IoT, like for robotics and drones. This is very promising for our expected growth that this market area runs at a healthy level of above 10%. In blue, you see the portion that reflects our present and emerging growth drivers.
This area has an even more attractive CAGR of 14%-18%. Growth is mainly driven by the LED adoption rate, for example in horticulture and smart health applications. To make these trends more tangible, let's have a deep dive to the three important growth driver applications. Let's start with horticulture, which some call also agriculture. In typical greenhouses or vertical farms, you grow plants and crops with support of luminaires, which consist of traditional lamps or LEDs. We at ams OSRAM develop, manufacture, and sell the LEDs for those luminaires, and also sell the related sensors when required. Horticulture and smart farming is a fast-growing market driven by several factors. First, increasing LED adoption is a key driver. In 2021, there was only a 10% adoption rate of LEDs in illuminated greenhouses, showing the huge potential for growth in this market.
With more LEDs, the power consumption in greenhouses will be significantly reduced, and this also means a positive impact on CO₂ footprint. Second, the better return on investment through automation and better light performance attracts more and more private investors. Additionally, governments are looking into agriculture to reduce dependency on imports and shorten supply distance through being closer to consumers. Another driver is the increase in automation to reduce labor costs in vertical farms and thereby also increase the return on investment. Last but not least, there's a broadening range of crops suitable for greenhouses and vertical farming, where LED lighting offers such compelling advantages for growers. As just described, this slide illustrates the huge growth potential in the market for LED lighting. The graph on the left shows the global greenhouse area, which is roughly 5,000 square kilometers.
In black, this is the area that is not illuminated at all today. In light orange is the area that is illuminated via traditional luminaires or lamps. That small dark orange field shows the area that is illuminated with luminaires consisting of LEDs today, which only makes up 10% of the illuminated area. It is easy to see the huge potential for growth in this market. It is important to understand that in horticulture luminaires, you use mainly a combination of white and red LEDs. The ratio, depending on the crops you intend to grow. We at ams OSRAM focus on red LEDs, and this for a good reason. On the left-hand side of this slide, you see the market potential in concrete numbers, divided in red LED and white LED. Red LED currently make up nearly 1/3 of the market.
However, they will grow with a CAGR of 19%-23% until 2026 and make up half of the market by then. We have described the significant market potential in detail, but what is it that differentiates us in that market? Several important factors. We have 15 years of experience in red process and manufacturing technology. Second, we offer a full solution in-house from epi, chip to package. Third, around 3 percentage points better wall-plug efficiency compared to the next best competitor. 3% might sound little at first sight, but in this market, it is a very significant difference and competitive advantage for growers.
Fourth, our new batwing lens design delivers better light distribution, so more efficient use of light for the growers. Fifth, we are number one in both lifetime and reliability, and we are best in class in application support. Let's have a look to a short video which illustrates what horticulture means.
Discover the new standard for professional horticulture applications. Greenhouses with top lighting solutions, with interlighting solutions, and vertical farming designs. Paving new ways in solving nutrition problems, reducing CO₂ through lower energy consumption. Our lighting and sensor solutions make it possible for a better life. Red is the most important color to grow plants. With the OSLON Square Hyper Red, ams OSRAM offers the best horticulture LED on the market, thanks to its leadership in red chip technology, resulting from many years of internal expertise across the full manufacturing process. OSLON Square Hyper Red is pure growing power, benefiting from the best performance, best robustness level, and best lifetime value.
Horticulture lighting has become a clear growth market with high returns on investment. ams OSRAM offers a broad portfolio of horticulture LEDs across the spectrum. Red, blue, and white, as well as complementary sensor solutions to support the perfect lighting for all types of plants and flowers. Illuminate. Grow. Live. ams OSRAM. Sensing is life.
Let's move to our next key growth driver, disinfection through UVC. This is another market with strong long-term growth potential, which obviously has been accelerated significantly by COVID-19. On the one hand, there are UVC LEDs, which will not only enable the replacement of large energy-hungry mercury lamps, but they will also enable a whole range of new applications that were previously not possible. Small footprints and higher energy efficiency, both resulting in lower cost to the end user. On the other hand, what makes this market even more attractive for ams OSRAM is that next to the LEDs, we also offer UVC sensors and presence detection TOF sensors.
We will see growth across various areas where disinfection plays a role, be it in the air, for example, embedded in air conditioning systems, on surfaces, think of hospitals and the food industry or in transportation, or for water treatment, both at the point of use, think of the water dispenser, or also at larger wastewater treatment plants. Clearly, the pandemic has been an accelerator for the potential in this market, as disinfection needs to be looked at differently today. In this market, we will focus on high-power applications in increasingly demanding segments. This slide explains how the market is expected to develop in waves. The first wave focuses on consumer products. A few years ago, the market focused on very few niche applications. Over time, UV-UVC LED disinfection will extend into various areas of our daily life, so this area will broaden and grow.
The second wave will be household goods. For example, imagine disinfection in washing machines and UVC integrated into general lighting. The third wave will focus on medical and automotive products inside the car ventilation system or in medical facilities. Last but not least, UVC LED disinfection will even be used for professional water treatment. In a nutshell, with increasingly demanding applications and higher power requirements, the market becomes more and more relevant for us. On the left side of this slide, you see again the expected potential for the addressed market. While UVC disinfection is a significant market already today, the need for high-power LEDs is just about to start taking off, which shows our timing is perfect to enter this market as a high-performance player. We really focus on high power, which is expected to see very strong growth rates in the coming years.
Here we differentiate via, first, best-in-class wall-plug efficiency. The target is 20% to address professional needs. Second, we cover the whole value chain from EP to package and have full in-house manufacturing, where, for example, packaging of UV LEDs poses a number of challenges. Last but not least, our strong quality reputation to serve the industrial and medical segments. Let's also have a short video on UVC LEDs.
Without sunlight, there wouldn't be life. It gives us the heat and light we need, but we only feel some of its incredible power. What we can't see is the UVC light the sun emits. Earth's atmosphere protects us from this invisible light, a light powerful enough to damage the cells of microscopic organisms. UVC light penetrates the cells, breaking the DNA and RNA structures, preventing replication and eliminating 99.9% of the threat. It even kills the sorts of viruses that can cause our world to grind to a halt. ike the illumination industry before it, UVC light is going through an LED revolution. They are smaller and deliver targeted disinfecting power instantly. They also allow applications to target specific UVC wavelengths, maximizing their effectiveness.
These tiny lights are the magic ingredient that allow innovators to find new ways to clean air, water, and surfaces, from small-scale domestic applications to large public spaces. Thanks to innovative sensor solutions, UVC LEDs deliver power exactly where it's needed. This means they can become part of our daily lives without exposing us to the powerful UVC light. Their compact size means they can be used almost anywhere. In a world that has woken up to the importance of disinfection, they are changing the way we live, work, and travel. The purifying power of the sun delivered through the magic of UVC LEDs. Lights on, germs gone. UVC LEDs from ams OSRAM. Sensing is life.
Now we come to our last deep dive, LED and laser projection. Both laser and LEDs are used as a light source for projection, depending on the projected lumen. This is illustrated by the graph on the top. The higher the projected lumen, the higher the need to use lasers. Typical applications are professional projectors for offices or projectors for education in auditoriums. On a system level, laser and LED projection work in a different way, which is shown with the pictures on the bottom. For LED projection, different light sources in all three colors, blue, red, and green, are used and optically combined. In contrast, for laser projection, in most cases, only blue light is used as a source and partially converted into green and red light to project all colors.
While ams OSRAM is already the leading player in LED part, we are now also entering the laser part of the market. This means we will be the only player with a full portfolio of projection technologies, and we are also offering complementary sensor solutions. The market potential for both LED and laser is highlighted on this slide. Both areas are growing significantly. However, laser makes up the lion's share of the market. ams OSRAM is able to differentiate in both areas. As mentioned, in LED, we are an established player. We have best-in-class luminance in red and green and are on par in blue. We have a better match between LED and DLP size. We have best-in-class quality. We are even automotive qualified. The interesting part is why will we win share in laser. There are three key reasons.
First, customers want alternative supply to one major supplier in the area. We are set to achieve best-in-class wall-plug efficiency. Third, we have packaging synergies with our broader laser portfolio. Finally, we are confident that strong reputation in LED will help us outgrow the market in laser projection. Let me finally summarize the key takeaways for our industrial and medical business. First, the market position. Industrial and medical are both markets with demanding requirements. We are in a leading position in the majority of our addressed markets due to the fact that we are able to differentiate through innovation. Second, some growth. The market is providing us with significant growth opportunities, as shown, offered by mega trends that we serve with our capabilities, and we expect to outgrow the market. Third, our balanced portfolio. We have an attractive mix of shorter and longer term growth drivers.
In our established business, from the present growth drivers such as horticulture and longer term from emerging areas like UVC LED, micro cameras, and point-of-care diagnostics. Last but not least, we are the innovation leader with a differentiated offering in each of our key growth drivers and will drive market penetration that way. N ow I hand over to Alex to conclude the presentations before. Following my colleagues' presentations, let me now summarize what you should take away from today. As promised, we have filled our value proposition with life for you today. We have not only shown you how its five elements are connected and underpinned, we have also presented clear targets to measure our success and have laid out our plan to achieve these targets. As ams OSRAM, we are committed to growth as the leader in optical solutions.
That means a revenue CAGR of over 10% outgrowing our SAM. We have charted a clear path to strong, sustainable profitability. That means EUR 350 million of synergies and savings and doubling our adjusted EBIT margin to 20%+. We will drive broadly supported growth with a balanced and diversified business mix. That means automotive and consumer, each 35%-40% of revenues and a balance from industrial and medical. Our top 10 customers at 35%-40% of revenues. We follow a prudent financial policy, combining debt reduction with investment for growth. That means over EUR 500 million disposal proceeds and targeting investment grade as net debt to adjusted EBITDA below 2. Our focus is on long-term value generation.
That means reinvest into organic growth, become carbon neutral by 2030, and achieve 25% gender diversity in leadership by 2026. This is what we have set out to deliver, and I'm fully convinced that we will. To sum it up for today, why we are so excited about the future of ams OSRAM? Because we have the technologies, we have the market opportunities, we have the customers, and we have the people to be successful to win in our markets and to become the uncontested leader in optical solutions. Thank you all for your attention.