Good day, and welcome to the ams OSRAM Q2 2026 Results Credit Investor Q&A Call. My name is Anne, and I will be your eco coordinator. The format of the call includes prepared remarks from the company, followed by a question and answer session, at which point attendees will have an opportunity to ask questions live. Attendees are also welcome to submit questions in writing via the Ask a Question button found on the upper right of the screen. At this time, I will turn the call over to Jürgen Rebel with ams OSRAM. You may now begin.
Good afternoon, Europe. Good morning, Americas. This is Jürgen speaking. We welcome you to our second quarter 2026 credit investor call. Rainer, our CFO, is with us today, and he will walk us through the key developments of the second quarter. Rainer, please go ahead.
Thank you, Jürgen, and hello everyone from my side as well. We delivered another strong quarter with revenue and adjusted EBITDA both landing at the high end of our guidance range while continuing to execute on our Digital Photonics strategy. Let us turn to slide three. Our semiconductor core business grew 13% year-on-year on a like-for-like basis, driven by automotive strength and improving industrial demand. This is nearly twice the growth implied by our current midterm semiconductor model and underscores share gains. We also delivered record first half design wins performance, securing more than EUR 1.6 billion of future business just in the second quarter. Momentum is building across both our core semiconductor franchise and our Digital Photonics growth platforms, reinforcing confidence in our long-term growth trajectory. In Digital Photonics, we achieved several important milestones during the quarter.
First, we strengthened our organization setup by creating dedicated business lines around key Digital Photonics themes, accelerating execution, enabling faster scaling of innovation. We also strengthened the team with external talent. Ashkan Seyedi from NVIDIA now leads our AI Photonics business, bringing deep industry expertise and application know-how. Second, we reached microLED array-based light engines for next generation AI-enabled AR smart glasses, bringing the platform closer to mass production resonance. This positions us to enable a new class of AI-powered user experiences. Third, in AI Photonics, we expanded our roadmap by starting development of micro-photodiode arrays for the receive channel of slow and wide optical interconnects. This broadens our target product portfolio, increases our bill of materials opportunity, and supports our long-term objective of providing the complete optical engines.
Fourth, on the sensing side of Digital Photonics, we secured initial design wins for our benchmark 3D multi-zone time of flight platform in both robotics and smartphones. Taken together, these milestones demonstrate that Digital Photonics is progressing from technology development towards productization and commercial scale. As part of our balance sheet improvement plan, we successfully placed the EUR 1 billion senior notes due 2032 with a 7.25% coupon. Replacing much more expensive 2029s, this reduces our interest cost by EUR 40 million. We also continue to sharpen our portfolio and capital allocation focus through the divestment of non-core businesses. On July 1st, we completed the divestment of our non-optical sensor business to Infineon for EUR 570 million. In addition, we signed the divestment of our subscale CMOS image sensor business to Indie, further sharpening our strategic focus and doubling down on the most promising Digital Photonics opportunities.
In summary, the quarter reflects strong execution across our strategic priorities with proper growth in the core business, continued progress in Digital Photonics, and further balance sheet strengthening. Now turning to slide four. Q2 was another strong quarter. Group revenues reached EUR 805 million, landing well in the upper half of our guidance range. Adjusted EBITDA was close to 17%, at the high end of our guidance, supported by strong performance across all three divisions. Revenue increased 4% year-on-year and 9% on a like-for-like basis at constant currencies. Adjusted EBITDA was slightly lower year-on-year, primarily reflecting the deconsolidation of the specialty lamps business. Higher oil prices and foreign exchange headwinds also weighed on profitability. Now, the segment performance on Slide five. OS benefited from strong demand across the board. Revenues improved 11% sequentially and 6% year-on-year. In several product lines, supply remains constrained, and we are effectively sold out.
Adjusted EBITDA improved in line with operating leverage, partially offset by higher raw material costs, particularly gold. Year-on-year, adjusted EBITDA declined by EUR 40 million despite higher revenue, reflecting foreign exchange headwinds and more than 25% increase in gold prices and product mix effects. CSA benefited from a broad-based industrial recovery, including some inventory replenishment in the non-optical sensor business prior to its divestment to Infineon. Revenue increased 14% sequentially and 7% year-over-year. Profitability improved on higher volumes, strong factory utilization, and a favorable mix from industrial medical applications. Year-on-year, adjusted EBITDA remained broadly stable. Lamps and Systems requires a closer look. Sequentially, revenue declined as expected due to normal seasonality and the deconsolidation of the specialty lamps business. Year-on-year, the revenue declined a bit due to the deconsolidation effect.
Importantly, though, our traditional automotive lamps business delivered structural growth, supported by market share gains following the bankruptcy of a key competitor. Profitability reflected the deconsolidation of specialty lamps and lower seasonal volumes quarter-on-quarter. Year-on-year, adjusted EBITDA increased 16%, driven by strong aftermarket demand and higher factory utilization. Overall, we delivered a strong quarter across our core portfolio, with all three divisions contributing to revenue growth and profitability. Turning to slide six. Adjusted for the weaker U.S. dollar and the exited non-core portfolio, our core semiconductor portfolio grew a strong 13% year-on-year. As a side note, the non-core portfolio is now largely wound down, contributing only around EUR 10 million of residual revenue. Looking at our end markets, automotive continued to perform well and increased sequentially, supported by strong order intake during the quarter.
We continue to benefit from share and content gains, although we believe some restocking also contributed against the backdrop of macroeconomic uncertainty. Importantly, our automotive LED business grew 5% year-on-year on a like-for-like basis, demonstrating the impact of the design wins accumulated over recent years. Performance improved across all regions except China, where end market demand remained softer and competitive intensity elevates. Industrial and medical continued to recover strongly, with revenues increasing approximately 30% sequentially and nearly 20% year-on-year. We saw a strong upswing in HoReCa and continued strength in professional lighting, where we are gaining share, particularly in mid-power applications. Order intake in non-optical centers was also very strong, reflecting elevated customer demand ahead of the business transfer to Infineon. Overall, we continue to gain share across multiple end markets. Consumer performed better than the typical seasonal pattern would suggest.
Revenue growth sequentially, supported by strong sell-through at selected customers despite the softer smartphone market overall. Our portfolio remains focused on premium smartphones and high-end wearables. Year-on-year revenue increased slightly despite foreign exchange headwinds and the phase-out of non-core portfolio elements. Turning to slide seven. Augmented reality smart glasses represent one of our most important long-term Digital Photonics growth opportunities. While the market is still at an early stage, adoption is accelerating, and the first AI-enabled smart glasses with integrated displays are now entering the market. Last quarter, we outlined our potential bill of material opportunity per device. Depending on the customer architecture and component content, we estimate a potential contribution of EUR 50- EUR 100 per smart glass, spanning sensing, illumination, and light engine solutions. On this slide here, you see an Omdia projection for AR smart glasses and VR headsets.
In their view, by 2030, combined unit shipments could reach approximately 60 million devices. Importantly, the study suggests that around half of these devices could incorporate advanced display technologies, implying a market of roughly 20 million AR smart glasses with displays. We believe we are uniquely positioned to lead this opportunity. Our objective is to become the leading supplier of microLED array-based light engines for the emerging AR smart glass ecosystem. We are confident in that ambition because our microLED array technology combines pure performance scalability and system integration capabilities. With that, let us move to the next slide, which is number eight. Our leadership in AR light engines builds on more than a decade of innovation. The journey started with our vision to revolutionize automotive lighting through highly pixelated intelligent headlamp systems.
That vision led to the development of EVIYOS, which today is the market-leading microLED technology for advanced forward lighting. By extending the technology to red, green, and blue emitters and combining it with our unique 8 in microLED manufacturing platform, we are now applying the same core capabilities to the next generation of AR smart glass. Our solution integrates red, green, and blue microLED arrays with ultra-small pixel sizes and a seamless back plane into a highly advanced light engine platform. This architecture delivers several key performance advantages, which are up to 3 x higher power efficiency, enabling lighter, more attractive wearable designs. Significantly higher brightness, supporting outdoor use while maintaining low power consumption, and up to 2x higher angular resolution, enabling sharper images and a more natural viewing experience. These capabilities are highly relevant for consumer adoption and represent key requirements for scalable AR smart glasses platforms.
Importantly, our differentiation goes beyond device performance. It combines proprietary microLED technology, system expertise, manufacturing know-how, and a clear product roadmap. Taken together, we believe this positions us strongly to lead the emerging AR smart glasses market. With that, let us turn to slide nine. Move to another important Digital Photonics opportunity. We are expanding our development activities into the receive side of slow and wide optical interconnects for AI infrastructure. Our long-term ambition is clear: to participate in the complete optical engine, covering both the transmit and receive functions. This vision is illustrated on the left side. Over the last quarters, we have systematically expanded our development roadmap. We have initiated programs in micro emitters, micro optics, and now micro-photodiode arrays, while continuing to evaluate the remaining building blocks, including seamless ASICs, advanced packaging, and testing.
Step by step, we are broadening our technology footprint and increasing our opportunity to participate in a larger share of the optical engine value chain. With that, let us move to some financials on page 10. Free cash flow was - EUR 190 million in Q2. Operating cash flow amounted to - EUR 77 million, and that includes a seasonal buildup of working capital ahead of the smartphone and lighting season. EUR 40 million reduction of factoring, annual bonus payout, as well as net interest payment of close to EUR 40 million. Please be reminded that we said earlier this year that we wanted to reduce factoring by around EUR 100 million this year. CapEx remained fully in line with our full-year guidance of approximately 8% of revenue. Let us now take a brief look at our Simplify program on slide 11.
Simplify is designed to reshape our operating model and to deliver EUR 200 million of additional annual savings by 2028. Cost, speed, and agility are our guiding principle. Implementation is progressing as planned, and we have already realized approximately EUR 10 million of annualized savings. An important milestone in the continued execution of the program was reaching an agreement with the German Works Council. By year-end 2026, we target around EUR 30 million of realized savings. By end of 2027, we expect roughly half or EUR 100 million of annual savings. The program remains an important lever for improving competitiveness, increasing agility, and supporting future margin expansion. Let's look at liquidity and capital structure on slide 12. We made significant progress on our balance sheet optimization in the second quarter. We successfully placed EUR 1 billion of senior notes due 2032 at a coupon of 7.25% .
The transaction was well received by investors. Demand exceeded the initial offering size by 6 x, allowing us to increase the issue size to EUR 1 billion. We used the proceeds to fully redeem the 12.25% notes due 2029 and partially redeem the 10.5% senior notes due 2029. Following these transactions, only EUR 725 million of the 2029 senior notes remain outstanding. We also repurchased EUR 127 million of the 2027 convertible notes through bilateral transactions at a price well below par. After these transactions, we maintained a strong liquidity position at quarter end. Cash amounted approximately EUR 1 billion. Including the revolver, total liquidity stood at approximately EUR 1.5 billion. Following the closing of the non-optical center business divestment to Infineon on the first day of the new quarter. Cash increased to approximately EUR 1.6 billion and total liquidity to approximately EUR 2.1 billion, including our recently extended revolver.
The outstanding balance of the convertible notes has been reduced to approximately EUR 430 million. We have also updated the maturity profile to reflect our current expectation that any potential tendering of the remaining Osram shares more likely to occur in 2027, potentially during the first half of the year. The liability associated with the Kulim II sale and leaseback remains largely unchanged. Overall, we have meaningfully strengthened our capital structure, reduced financing costs, and increased financial flexibility. With that, let us take a closer look at the coverage of our upcoming maturities on slide 13. We have received the EUR 570 million from Infineon. As a result, we have EUR 1.6 billion cash. This fully covers all foreseeable near-term funding requirements, that is the EUR 433 million of the convertible.
After the closing of the divestment, we have 120 days to make a mandatory par offer relating to the guaranteed asset. The offer will be in a range between EUR 120 million, EUR 150 million. Second, the expected transition effects in 2026, including low adjusted EBITDA from divested businesses, rental costs, transformation expenses related to Simplify. The repayment of approximately EUR 100 million of customer pre-payments, a planned reduction factoring of another roughly EUR 100 million. Excluding disposal proceeds, we currently expect free cash flow to remain more than -EUR 300 million in 2026. More than EUR 250 million of those are related to those special effects. However, we continue to expect a substantial improvement of free cash flow in 2027. Hence, assuming business trends remain broadly consistent, we see a clear path to positive free cash flow, excluding any future disposal proceeds.
Third, the expected settlement of the remaining Osram minority shares following the final court decision. As I said, for planning purposes, we assume now the first half of 2027. After we covered all of these, the converts and the minorities and the cash flow, there is still the meaningful cash buffer as much as we need. Let me reiterate the key point. All foreseeable near-term future requirements are fully covered by existing liquidity. This allows us now to remain focused on the further optimizing the cost and maturity profile of the remaining 2029 senior notes. We will keep you updated on our progress. On to the outlook for the third quarter on slide 14. We expect revenues of EUR 770 million-EUR 870 million and adjusted EBITDA around 16% ±1.5%, based on an exchange rate of 1.15 for the dollar.
In Semiconductors, we expect the underlying business to continue to grow both seasonally and structurally. However, following the divestment of the non-optical sensor business, reported revenue will be lower as we will now record only a manufacturing service margin from Infineon rather than the full revenue contribution. This will reduce quarterly revenue by approximately EUR 40 million and EBITDA margin by approximately 1.5%. This is illustrated on the diagram on the right. Order intake remains healthy, and our book-to-bill ratio supports a solid third quarter. In Lamps and Systems, we expect the traditional automotive aftermarket business to show its usual seasonal recovery. For the full year 2026 outlook, that remains broadly unchanged. The revenue will be modestly lower due to the portfolio divestments and FX. The adjusted EBITDA will be somewhat lower than last year, reflecting the divestments, rental costs, but also the precious metal prices and other transition-related effects.
Net result is expected to be positive in the high double-digit million euro territory, supported by a high gain from the sale of the non-optical sensor business. Looking ahead into 2027, we continue to see a clear path to positive free cash flow, excluding any divestment proceeds. Our core semiconductor book fully grew 13% year-over-year on a like-for-like basis. We secured more than EUR 1.6 billion of new business just in Q2, reflecting continued market share and content gain.
In Digital Photonics, we aligned our organization around our key growth themes through dedicated business lines, accelerating execution and scalability. We achieved important development milestones for our microLED-based light engines for AI-enabled smart glasses, bringing the platform closer to mass production readiness. We expanded our AI Photonics roadmap by adding micro-photodiode arrays to our optical engine development activities. We secured the first design win for our high-resolution multi-zone time of flight platform in robotics and smart homes. Together, these milestones demonstrate continued progress in building the next generation of Digital Photonics growth opportunities. We executed our balance sheet improvement plan as intended. We completed the divestment of the non-optical sensor business to Infineon and received the proceeds. We signed the divestment of our imaging sensor business to Indie Semiconductor. We successfully placed EUR 1 billion of new senior notes with a coupon of 7.25%.
We redeemed the expensive years old senior notes and part of the euro note in June 2029, reducing the annual interest expense by approximately EUR 14 million. With that, I'm coming to an end. We are certainly happy to take your questions.
Thank you, team. Ladies and gentlemen, we will now conduct the question and answer session. If at any point you'd like to submit a written question, click on the Ask a Question button on the upper right of your show and type in your question. If you'd like to ask a live question, please press star one on your telephone keypad to enter the queue. If you have joined via web instead, please press the raise hand icon on the right side of your screen. We will pause here briefly to allow any questions to generate.
All right. We received a written question from Nick from Meriton Fund. Can you elaborate on when you would expect to come back to the market to address the remaining 2029s? Is it a September 2026 timeframe, or will you wait on to the step down into 2027? Rainer, what's your view on that?
Yeah, we haven't taken a final decision on how we would do that. As you're pointing out, it's quite expensive to do it now, the cost will come down after March 2027. Again, we haven't taken a final decision.
Next written question comes from Matheus, Point72. What is your policy on equity dividend?
We do not have a policy in place right now, we will certainly want to reduce the debt-to-EBITDA to below two before we start thinking about that.
Thank you, team. Our next question is a live question from Laura at MFS Investment Management. Laura, you may proceed.
Hi. Thanks so much for taking my questions as always. Could I maybe get an update on the last 12 months pro forma EBITDA for the remaining sort of parameter, excluding any disposed assets? I think you had EUR 681 million, which was based as of LTMQ1 at the time of the refinancing, that included, I believe, EUR 172 million of benefits from the Simplify program. Excluding that, was EUR 509. If I could get an updated number for that as of Q2, that would be helpful. Second question regarding the restructuring costs. I believe you previously mentioned a total of EUR 150 million for the Simplify program, of which the majority, EUR 50-EUR 100 would be incurred in 2026. How much has been incurred year to date? Maybe an updated guidance for the full year amount of restructuring costs.
Any updates you may have on the timing of the OSRAM minorities or the Kulim plant discussions, that would be helpful. Thank you.
Hey, Laura. Thanks for the first question. We'll drop you an email on that. It's a simple calculation exercise.
Sure.
Just hold up the process now, Rainer.
Sure.
The total restructuring cost, EUR 150 million is certainly very much on the high end of it. I don't have a final number, but I would assume that it would be closer to something like EUR 120 million. There was a question how much of that is already booked. Hope I get an answer from accounting. EUR 80 million or EUR 60 million, I forgot. From the transformation cost, I think it was EUR 60 million booked already. Just a second. Just looking that number up.
Of course.
Laura, was there another question?
Sorry, just maybe an update on the Kulim plant discussions. Any thoughts around that and the OSRAM minorities? I'm assuming it's the same as when we spoke last, just to check.
Yeah. Okay. Kulim and minorities. Kulim, not too much news compared to last time. We're discussing with some interested parties both. I think I explained that last time that if many of the potential buyers say the facility is rather large for them, we have now also entertained kind of the thinking that we could share it in a way that we would do a 50/50 JV. Share the facility. There's maybe not a need for us this year or next year for additional space, but with all the new opportunities now ahead of us, we will probably be running out of space in two or three years. I'm pretty sure we'll be happy then if we still had some room. That is also a discussion we are currently having, and we have a couple of parties that are interested in that.
Again, if somebody would take all of it, we would certainly still be open to do that. We will keep you posted if there's any significant progress.
All right. Thank you.
Yeah. In the put options, we were informed by the court that the judge will be replaced again, because of the conflict in interest. Long story, in short, a new judge needs to be appointed, then it will probably move into the first half of next year. No changes in the discussions. We still believe it's just a formality. Then two months after the final ruling, we guess the majority of shares will be tended, maybe 90% of the outstanding shares.
Before we go into the details, I'll probably drop you an email, Laura, on the total transformation cost we expect for the 'Simplify' program, where we target EUR 200 million savings by end of 2028. It's of the order of EUR 150 million.
I said it's probably more like EUR 120 million.
Closer to EUR 120 million, I think, Aldo said. Fine. I'll take that.
Most of that, and the majority will be booked this year, and I will drop you the email and the exact split as soon as we have it.
Sounds good. Thank you so much. Appreciate it.
All right. Let's move on, and we'll answer that during the call.
Laura, for your question. Our next question is a live question as well, and it comes from Marco at Amova Asset Management. You may proceed.
Hi, thanks for taking my questions. I have three. The first question is just around the impact of memory shortages beyond Android. Most of the commentary was centered on Android. I'm just curious whether you see any effect at premium smartphone or wearable customers, or in industrial and the auto modules. A quick follow-up would be, is there any sort of thing that you're watching or an early indication that it is broadening and expanding beyond Android? That's my first two questions.
I would not discuss it by Android versus non-Android. I would really discuss it by the low, mid, or high price segments. The number of smartphones sold is down 10% or so as you know this year. That is all in low to mid, and we don't see that in the high-end products. It is not that it is impacting our revenue negatively, but it is certainly reducing a bit the growth this year. The development is okay, but it could have been even better. The high-end smartphones here, the content per smartphone is certainly much higher for the mmWave sensor than for a low-end product. The impact is somewhat limited, but it could have been even better.
Okay. Thanks. Is there any sort of indicator that you're watching to see if it's broadening beyond just Android?
Well, we don't have a special indicator. What we hear from the industry, the non-Android vendor out of the West Coast, they seem to have less trouble in getting their memories for their different devices because of purchasing power. From that. Beyond that, there is no particularly early indicator. We're there like everybody else.
Okay. Thanks.
Laura, the number of the one-time cost accrued so far is EUR 70 million in 2025. We already had last year, then we put quite a bit in Q1, another EUR 5 million in Q2. We are still trying to do everything to reduce it even further.
Yes, please go on.
Yeah. The second question is just on the CapEx cost sharing. Aldo earlier this morning, he said that for next year, the CapEx intensity may be above 8%, but that could be offset by sharing R&D and CapEx cost with customers. I'm just kind of wondering how would that look like in practice? Would it be in the form of customer prepayments, tooling contribution? If you just could provide any additional color, it would be really helpful. A quick follow-up would be just what proportion of your Digital Photonics investment is currently covered by any of those? Thanks.
Yeah. I was actually meeting with her about this morning. This year we will stay below the 8%. For the AI opportunities, really that the customer has been paying half of the R&D cost by supporting the funding with NREs and also paid the majority of CapEx. Going forward, the product will obviously, as a ramp, we need to continue to invest, will be cash flow negative for another few years. During that time, we expect the customer to continue to support. How that exactly will work, if that's NRE or CapEx support or whatever, that's what we are currently discussing. I cannot give you an exact guidance on that front as we are still discussing what kind of means how they will exactly contribute. On datacom, the CapEx is much lower because we actually have a lot of that capacity.
We will also be a bit on the datacom side, the development partner we have is contributing a significant portion of our costs through NREs. Yes, there will be some CapEx, but at this point of time, by far not as much as we have in the AR.
Okay. Thanks for providing so much color. I appreciate it. My last question, just on the patent indemnification. My understanding is that the indemnification runs to customers of yours rather than being a direct claim against you. Does it mean that exposure is capped by contract, or is it more open-ended and tied to the customers' volumes? Any color will be really helpful. Thank you.
I sure fully got the question. Can you repeat that?
Why patent indemnification? In what context?
It's the patent infringement that one of your client.
Which patent infringement?
Looking at the first half report, there was something about a patent infringement.
Which report?
Yeah, ours apparently.
It's okay. I can follow up by email. Thanks.
Yeah.
Thank you, Marco, for your question. Our next question is a live question from the line of Xiang at Lazard Asset Management. You may proceed.
Hi, thanks for the presentation. I have two questions. The first one is regarding the EUR 120 million and EUR 150 million to repay debt that you mentioned. As I see in your press release this morning, you mentioned that this amount should be used to launch a tender offer for pro rata buyback of 2027 convertible bonds into 2029 senior notes. Does it mean it'll be proportionate based on the outstanding amount of 2027 convertible into 2029 senior notes? Does it mean you will still have some portion of 2027 convertible to be repaid in next year? The second question is regarding the cash interest. As I see in your cash flow statement, the cash interest in the first half seems to be a bit higher than the run rate level, something around EUR 140 million -EUR 150 million.
I'm just wondering how much of this amount is transaction-related costs. Thank you.
The EUR 120 million, EUR 150 million tender offer, that is in line with the indenture of the two instruments. We certainly have to make an offer pro rata. We'll build a book now, given that the higher bond, the 2029 is trading above par and the convertible is trading below par. We assume that there will be basically nothing offered under the higher bond and a lot offered under the convertible bond. If that thinking is correct, in the end, the whole EUR 120 million -EUR 150 million will go to the convertible. That's certainly a good assumption, but let's see what we will have in the books. If we still had EUR 430 million outstanding of the convertible, then we subtract that, there would still be EUR 300 million or so, plus, minus open. That is due in November 2027. Cash interest.
We had, obviously, when we called the bonds, we had one-time cost, and because it was a preliminary repayment, there was also an extraordinary interest payment. Usually had it twice per year, but when you call it, you have to pay the accrued interest. That was another EUR 90 million that we paid in Q2.
Okay. Thank you.
Next question comes from Julia Marchant. Could you outline the key building blocks to achieving positive free cash flow by 2027, including revenue growth, EBITDA margin, CapEx, and other major drivers?
Yeah, certainly. Growth will be a contributor in a higher EBITDA margin. You have me saying that Simplify will expect to have achieved EUR 100 million savings. There's more savings initiatives like reducing the gold consumption and other things. Yes, we certainly expect EBITDA margin to improve. We continue to believe that CapEx will emerge under control. Yeah, the interest payments will be lower because we just issued a bond that has a better interest profile and we certainly expect to do more of that next year to get the interest cost on the interest, I mean, the cash from interest further down. What we're doing this year is reducing the factoring by EUR 100 million. We will not reduce it further than next year. It is the payment from restructuring that is certainly higher this year than next year.
If you add all that up, we are on the path to positive. We didn't say it's really positive because that always depends a bit on the market environment, but the market environment holds like it is today. I'm actually quite positive for that. Next year still has the EUR 100 million repayment of the customer prepayment, so that's the weight on it. It is only positive and not significantly positive. Once that customer prepayment goes away mid-2028 and the restructuring payouts go away, as we said before, we certainly see a path to a free cash flow of EUR 200 million or more.
The next question comes from Connor, Bank of America. When do you expect to receive the portion of the government grant for CapEx this year? I presume it's from the Austrian Chips Act, you mean?
Yeah. Austrian Chips Act, that should be in roughly half the amount of last year, maybe EUR 30 million in the first quarter.
Hang on. There is another question. Julie from Allianz Global Investors. Will the convertible bond be tendered at par, or would you like to previously do an offer below par? We presume that's beyond the mandatory offer we have to do after the index.
The EUR 120 million, EUR 150 million, we'll have to do at par, we will do that. What we do then with the remaining EUR 300 million is not decided. If we make another offer, we do buy that or a thing, so we keep it open till November 27th, but it's not decided.
Thank you, Tim. It appears we currently have no further questions. Handing it back to Jürgen Rebel for any final remarks.
Thank you, operator. Thanks, everyone, for joining today's call for credit investors. Thanks a lot for the detailed questions. As discussed, one or the other answer we'll very much details we'll provide by email. If you have further questions, don't hesitate to reach out to us. Otherwise, we wish you a great summer break, and some of you we might see during the quarter on roadshows or conferences and/or on calls. Thanks a lot for that, and looking forward to speaking to you next quarter again. Bye and have a good day.
This concludes today's cover call. Thank you everyone, and have a great day.
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