Morning or afternoon, ladies and gentlemen. Welcome to the AT&S Full Year 2024-2025 Conference Call. With us today are Michael Mertin, CEO, Petra Preining, CFO, and Ingolf Schröder, Member of the Board and EVP of the Business Unit Microelectronics. Mr. Mertin will briefly introduce himself and then hand over to Mr. Schröder, who will give an overview of the key developments as well as a market update. Afterwards, Ms. Preining will comment on the financed figures and our guidance. As Marek mentioned, the presentation will be followed by a Q&A session. Now, I would like to hand over to Mr. Mertin. The floor is yours.
Yeah, thank you very much. Also, good afternoon, good morning from my side to everyone. My name is Michael Mertin. I'm the new CEO of AT&S since two weeks now. Hopefully you can accept that I will not answer all your questions in detail, especially not the questions regarding the last year. Nevertheless, I'm proud to be part of the team now. Later on in the Q&As, I can share some of my first experiences, especially the positive ones, of course, with the highly engaged team here and the highly engaged employees. That is something that is not usual for each company I've seen so far. Please let me hand over now to my colleague, our CFO, Ms. Preining, who is guiding you through the numbers and figures for the last fiscal year.
Thanks a lot. The floor is now with Ingolf Schröder. He will do the market and I will do the numbers.
Okay, sorry.
No problem.
Okay, good morning, good afternoon. Also from my side, Ingolf Schröder. Let me start off with some key developments of the last financial year before I start in a bit more deep into the markets and the various segments. The last year, we could show a very strong operating performance in a very challenging environment, primarily driven with price pressure, geopolitical aspects, many, many aspects. We do believe that we have performed very strong. Our both huge investments announced a couple of years back, Kulim and also Leoben, are in ramp and on plan. Same as the diversification with regard to IC substrate customers. It is also driven forward and is very promising also going forward. We have been very successful in the sale of our Ansan plant.
Last but not least, I would like to mention also there is still a certain lack of clarity regarding tariffs and the overarching situation. In addition, I would like to mention that the last financial year is the second best result in company history in terms of sales and EBITDA. You can switch to the next page, please. I would like to start with some PCB and end market insights or perspectives. The overall market for PCB in the last year, 2024, grew by 7%. The market growth was primarily out of the area CCC, and here dominated by computing and investments and activities, primarily in AI and infrastructure area. Automotive industrial remained pretty weak over the last year, mostly in Europe, while Chinese automotive supplier proved to be more stable.
As said, the European market was under severe pressure, ended up with even a volume shrink by 2% year-over-year comparison. The same is also for the value, which was reduced by 5%. Consumer and communication market saw price pressure as well, but here the growing volume could compensate the decline. If you go on the next page, please, how did the business unit electronic solution perform in the last year? The weak European market restrained the growth, and this price pressure was coming primarily from European automotive and industrial customers. Overall, the revenue over the last year was rather flat, minus 1%. If you compare Q4 year-over-year, the price effects outweighs the positive product mix and volume development. As usual, at the end of Q4, we could even see the not unusual post-Christmas seasonality.
On the next page, when it comes to IC substrates and end market, the market size for advanced substrates was rather flat in the last year in 2024, shrink by 1%. Here it was clear the general volume growth was overcompensated by a severe price pressure, at least 13% in some areas, even more. AI investments remained super strong, while in the data center environment, even signs of recovery visible, but data centers still somewhat muted. There is a slow recovery in traditional server and a significant growth in AI server, more than 50% year-over-year growth. It is visible that end of the last year, there are here and there signs already of an elevating inventory level in various areas.
When it comes to ABF substrates, it's a -5% year-over-year value decline, despite significant growth, 17% server growth, and with the 17%, it's even back on the 2022 level. 2022, 2023, sorry. Notebooks, 3% year -over -year, and still 10% below the level of 2022, 2023. How did the business unit on the next page, the business unit perform? Very positive. The market growth outperformed. Revenue-wise, the business unit microelectronics would grow by 9%, and this in an environment of the before mentioned severe and heavy price pressure. Year over Q4, year-over-year growth, positive effects from the new and long-term customers visible. Q4, quarter over quarter, volume growth also due to new clients. On the next page, some words on our investment into Kulim.
The current status of the investment, which we spent more than EUR 1 billion, the high-volume production started in April. We had two weeks ago the press conferences, the formal press conferences, where we communicated the production start. We are producing here latest technologies and products in a, let's say, state-of-the-art environment. They are primarily clean rooms, all the level from ISO five to ISO seven. Currently, we are employing 1,500 employees. Of course, this is growing over the time since we add new capacities and are ramping the capacities. This Kulim site is primarily designed for IC substrates for high-performance processors. Customers currently also here openly communicated this AMD, and we will also develop this site further with this customer. On the next page, how the situation is with the investment in Leoben Austria. Here we have spent so far more than EUR 500 million.
The official opening ceremony will be in the beginning of June. Same here when it comes to production area and clean room, all the level between ISO 5 and ISO 8, 400 employees at the moment. In addition to the small-scale substrate operation, we have this attached R&D center where prototyping small volume for advanced IC substrate and even advanced packaging activities can be executed under HVM conditions. When it comes to the customers, the product qualifications are ongoing for our customers. First functional samples were shipped in the end of 2024, and two or three customers we are waiting now for the final approval. Once this final approval is done, then of course HVM will start. On the next page, a few words on our October 2024 communicated cost-saving and efficiency program. Also here, we have strongly executed what we have promised.
AT&S delivered the communicated EUR 120 million over the last year. This target has been successfully achieved. The baseline is important also to mention here. The baseline was the actual cost of the year before. It is really P&L effective and very efficient. A small outlook into 2025-2026, the running financial year, additional EUR 130 million savings expected to counteract challenging market environment. It is also to somehow compensate the ramp-up cost from the additional lines in Kulim. With that, I would like to hand over to Petra for the financial results.
Thanks a lot, Ingolf. Warm welcome also from my side, from here from Leoben. I have the pleasure to walk you through the financials. As we have heard already from my colleagues, mixed picture, the year 2024-2025, we had to face quite some challenges coming from the market, but have defeated those challenges quite well. Firstly, the very strong EBITDA adjusted, Ingolf has already mentioned, second best in AT&S history. If we look at the EBITDA, even better. One has to say, though, that this result is highly impacted by the sale of the Korean plant. We have been very successful, signed and closed, closing on 31st of January, that transaction which we have reported about already. Additionally, a very strong second pillar, our efficiency program, Ingolf just has elaborated on.
This part with good performance in the BU microelectronics and also solid one from electronic solutions, we have managed to increase our equity ratio and reduce the leverage. On the financing side, I have already shared some information in Q3. Our new factoring line is up and ready, visible in the results in Q1 2025-2026. We have successfully also refinanced and signed our loan with the IFC. However, given the current volatile situation in the market, geopolitics, macroeconomic situation have been mentioned, part with our current balance sheet structure, we have decided not to or to propose no dividend to the HVM this year. Additionally, we have shared the guidance for Q1 for 2025-2026. This is new. Usually at that point in time, we share the full year's guidance, but based on the same reasons, given the blurred outlook, we have decided to share Q1.
I will dig deeper at a later point. Over the page, partially, those topics have already been addressed. We have guided initially EUR 1.5 billion-EUR 1.6 billion with an EBITDA adjusted percentage of 24%-26%. Now, I am quite pleased to announce that those numbers have been reached on the upper end. Our revenue, roughly at EUR 1.59 billion-EUR 1.6 billion, if you like, it is a plus of 3% on the group level. An EBITDA adjusted of EUR 408 million, adjusted by the startup cost you are already aware of, but as well adjusted by the transaction of the same amount. That brings us to a very strong 26%, which is even stronger by 0.9 percentage point over last year. The EBITDA margin, as already said, got highly impacted by the sale in Q4 and hence might not be sustainable forward-looking.
Quarter over quarter, plus 14%, that's a very solid growth, mainly driven by IC substrate. Ingolf has already elaborated on the reasons for that. Overall, for the full year, we are happy to share a net profit of EUR 90 million, which is an increase of roughly EUR 126 million. Over the page, our financial position and the situation development, cash and cash equivalents, as well as unused credit lines have come down in comparison to March 2024. However, this is planned. We have slowly but steadily finished now our large CapEx programs. Just to remind you, the last two years prior to the year 2024-2025, we have roughly invested each year a billion or slightly shy of a billion. This year, significantly lower and further decreasing. Therefore, there is not that much cash and cash equivalents and unused credit lines needed.
However, one important information, so both pillars add up to EUR 741 million. Additionally, we have deposited EUR 100 million for a longer time than three months at the end of 31st of March. This has come available again. If you would like to add those EUR 100 million, we are at 840-ish. Additionally, the new factoring line has been finalized in Q4 and will now in Q1 be ramped. We can see already the effects in April, but this I will share in Q1 with you. As there is still, with glimpsing into the next page and actually turning the page, there is quite some substantial debt outstanding. We, of course, elaborate further financing measures, and those are in progress. We talk to new financing partners as well as to our existing ones, which we have very good relationships with.
Overall, we are a little shy of 30% on fixed interest rates, and financing costs also have come down compared to the last quarter to 4.34%. Over the page, as we have received a couple of questions on that already, you see the effect of the sale of the Ansan plant. I do not think I need to read out the numbers for you, but the impact, as already stated at the very beginning, has been substantially positive, and so has also been the effect on net income and EPS. As this is a one-off effect, you can also see that the reason for not paying out the dividends is that we want to continuously grow the company again in a good position, in a healthy position, which we are already progressing in a very good path. That is the reason for not paying out dividends currently.
Over the page, and development and working capital projection due to the fact that we have only late in Q1 finalized all the legal procedures for our factoring line, the impact will only be seen in Q1. Therefore, we have as a comparison put the, as it would look like, situation in the box. You know that from the previous quarters already, and we are strongly driving to that lower level into Q1. Over the page, cash flow that most probably needs a bit more explanation and also on each and every line because a lot has changed year-over-year and in comparison. Firstly, on the operating activities, the major deviation is that, as you do know, we have very strong and solid contracts with our dear customers, and those have been contributing to the two plants in Kulim and Hinterberg mainly.
Those customer prepayments have come to an end that has been planned like this. Only very minor additional amounts have been received this year as it was scheduled. There is a large portion of the delta comes from customer prepayments, which has been received last year, but no longer this year. Additionally, as I have mentioned, there is a quite large share, roughly EUR 170 million of factoring, which has not happened in comparison to last year, which we are now starting to ramp, as said already. Of course, you have also the impact on interest and taxes, taxes, mainly due to the sale of Ansan in that bucket. Payables have been there has been a delta in accounts payables as well. This is partially due to the ramp of the new plants, partially also a cut-off topic.
We will have a very close eye on that development and bring that back to the usual levels once the two plants run steadily. Cash flow from investing activities mainly has two reasons for the big deviation. Firstly, as already said, we used to have very high CapEx amounts in order to build the two plants and equip the two plants, which came in significantly lower already as planned. Additionally, you also see the impact of the proceeds of the sale of Ansan. In the financing activities, this is plus minus EUR 20 million, very balanced. The repayments and the additional drawdowns keep on a steady level. Net CapEx, as you see in the bottom line, so the operating cash flow, free cash flow is obviously some of the parts above. The net CapEx, as said, has come down and almost halved the level of the year before.
Turning the page to the balance sheet, total assets on par. So depreciation and new additions keep on par level. Equity nicely increased, partially due to the sale of Ansan, partially also via the FX effect in the OCI and the other comprehensive income, reaching 23.3%, a plus of 2.6 percentage points. Net debt has strongly come down, as I have already told you for the last two quarterly calls, and has reached 2.5 times. Turning the page to the last two topics on guidance, we, as said, due to the current situation on the market, we have decided to guide Q1 for the time being and give you an approximate revenue target of EUR 400 million, which is still quarter, sorry, year-over-year, plus 14% with the profitability of EBITDA. Careful, EBITDA no longer EBITDA adjusted as we have ramped those two plants of approximately 16%.
This is still burdened by the ramp phase, in particular in Kulim sales, which will be products that will be produced in Q1 will only be invoiced in Q2. There is a mismatch in timing. Forward-looking in Q2, you will see a nicer number. Investments, we aim to spend EUR 65 million for Q1, which might be a good indication for the year. However, at the end of the year, we will see slightly higher quarterly numbers. The full year guidance will be given once there is more clarity regarding the U.S. tariffs and potential recession consequences out of the same. We will come back to you as soon as the situation is more clear. On the midterm guidance, there is no deviation, and we confirm the midterm guidance as we have announced that earlier.
With this, I have come to an end, and we are happy to take your questions over to Philip.
Thank you, Mr. Mertin, Ms. Preining, and Mr. Schröder. We will now start the Q&A. In order to give everyone the opportunity to raise questions, we would like to ask you to limit yourselves to two questions. Once we are through and if there are still questions and still time, we will start another round. Now, I would like to hand over to Marek to handle the session.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press 9 followed by the star key on a telephone keypad. If you wish to cancel your question, please press 3 followed by the star key. Please press 9 star now to state your question. The first question comes from Daniel Lyon Erste Group.
Please go ahead.
Yeah, hello. Thanks for letting me on. Actually, there's many questions, but I'll start with two. You mentioned the unclear tariff situation. Obviously, there's tariffs announced to come on the semiconductor industry, but can you share your current impact from the tariff situation? Maybe some details. How are you already impacted now, or are you already impacted now?
Sure. Happy to do so. The current situation hardly impacts us on a direct level. The orders, the assembler are not sitting in the U.S., so we don't ship products or hardly any products directly through the U.S. On a direct level, there is hardly any tariff impact outbound. Inbound, there is very small impact, so receiving goods from the U.S. to China. This is in a very low single-digit million level.
What is still unclear, however, is whether that will have a volume impact on consumer products. Therefore, the situation needs to be cleared. We have not received any negative feedback from our customers yet. There has been, after liberation, no updated lower forecasts. From that angle, we have no updated information. The overall situation needs to be cleared whether, in particular, the US is entering into a recession or the tariffs cause generally less consumer spending. That is the bigger, or if there is an impact on us, this would be the impact. The direct tariffs are just fueling the situation, if you like.
Okay. Thanks. My second one, for the time being, you are showing your maturity profile. We know that. It is roughly GBP 1 billion plus the hybrid to be refinanced in the coming two years.
Your current liquidity and trade lines should also be EUR 1 billion if we add the factoring. How do you expect to balance liquidity and lines going forward? What would be a level that you'd feel fine regarding liquidity only? Yeah. Just how do you want us to model this?
There were several questions in one. I just started with an indirect question on the hybrid. Allow me to say there are still 18 months until the first call date of the hybrid. We will decide how to proceed in due course. Any decision we will make will definitely be shared then once taken. On the billion, sorry, excuse me, you have mentioned on the maturity level, indeed, this is correct. I have also shared that roughly, and that is also the number you have now added up with the factoring.
That's a billion what we currently have in our books. Additionally, there will be also forward-looking and even lower leverage. Refinancing on the market should not be a big issue. I have also told you that we are currently, actually on the back of IFC, they have high interest to even increase the exposure they have with us further. This is something we're currently evaluating what would suit us best. There are several options with international banks, but also with our house banks, which we have very good context with. Lastly, and don't forget that also forward-looking, AT&S will spend less CapEx and therefore come to a positive operating free cash flow.
Okay. Perfect. Thanks for now and maybe later again.
We come to the next question from George Brown, Deutsche Bank. The floor is yours.
Yeah. Hi guys. Thanks for taking my questions.
I have two if I may. Just firstly, can you tell us what you expect for total CapEx or any further startup costs in fiscal year 2026, or at least give us a range that we should think about? Then secondly, can you share what the current utilization rate is at Chongqing? Do you expect utilization at Chongqing to decline over the coming years? Because Intel is either facing more competition from domestic suppliers in China, and I guess because also AMD will eventually ramp down whatever volume they have in China over time because they have capacity at Kulim. Any color on that would be useful. Thanks, guys.
Okay. Happily, we'll share the answer. I will take the first one that was on CapEx for the current fiscal year. EUR 65 million for quarter one. It will be understated to time it times four.
We have always said we have from last year to or from the year before to last year to this year, as there has been a shift between what we have initially guided last year and what we came, what we have basically finalized the year with. This is roughly the amount you can add to this year. As I said, we are not guiding. If you ask me now each and every KPI, we're not guiding the full year. I think it would be safe to say that this will still have a two in front, but a very, very high two. I hope that helps for your modeling. I guess this is a yes. Ingolf, would you like to answer?
Yes. I take the second part regarding Chongqing.
First, what we have shown is that we were able to outperform market growth-wise the current advanced substrate industry. Meaning is we could over the last year stabilize the utilization in Chongqing since this was the only running and active IC substrate plant within AT&S. Given the fact that there is still massive overcapacity in the market, we are from a utilization point of view in the neighborhood of 60+% in Chongqing. Based on the inputs we have from our various customers, we consider that this will also continue over the running year.
Brilliant. Thanks, guys.
The next question is from Gustav Fröberg at Berenberg. Please go ahead.
Thank you. Good afternoon, everyone. Thank you for taking my questions as well. I have a question to Mr. Mertin, actually. I know it is obviously very early in the process for you. You have just joined pretty much.
Could you talk to us a little bit about whether or not you have any plans to make any broader, bigger picture strategic changes in the CEO position and maybe give us a hint as to what is first on your agenda? I have a question on CapEx as well. We talked about it being kind of with a high two in front. Now, with this in mind, could you help us understand the moving parts around what will make your free cash flow be positive this year? Is it only due to factoring, or are there any other items that you think will move around in order to make sure that AT&S will be free cash flow positive for 2025, 2026? Thank you.
Thank you very much for your questions.
First of all, it's a little bit early, of course, as you said, to start with a real strategic discussion before I got the chance for the first 100 days to get a little bit of a deeper impression on details of the company, on details of the markets. Nevertheless, maybe some of you know my work already, what I've done for Jenoptik for serving them for roughly 10 years as CEO. It also was a kind of a situation with high debt at the beginning, and it was a continuous promise for profitable growth in this company, especially during my time. What is important for me is walk your talk. Therefore, I'm not talking too early, but when I talk, hopefully, it's a promise for you. What is relatively clear is that this company has to come back to the path of profitable growth.
Growing constantly, having cost under control, and delivering profit at the same point in time. We are not here yet, sure. I think this definitely will be part of the plan we have to develop in the upcoming time. You, of course, will be informed about all kinds of processes and projects we will start to come to exactly that point. Hopefully, this gives you a little bit of an impression. On the other hand, just have a look to my time at Jenoptik. The time as private equity was a little bit more in transparent, of course, for some of you. It gives you an impression. Thank you.
Great. Thank you.
Cash flow.
Happy.
Cash is king, by the way.
Queen in this house, if you like me to allow me to add.
The cash queen. I love it. Thanks for your question.
It's obviously a very important question. Allow us, we have now decided to guide one quarter for a particular reason and allow the market to stabilize again, and then we can come back to give more details and glimpse on all the other figures. Definitely, factoring will have a very positive impact. Also, the cut-off development in the accounts payable will look different over time, so there will be a stronger working capital position. CapEx, I have already told you. I would like to leave it at today's call on that level. We will share more information once we guide the full year.
Okay. No problem. Thank you.
The next question comes from Jan-Frederic Dreyer, Fountain Square Asset Management.
Hello. Thank you for taking my question. First question, you said you are looking for other customers besides AMD and Kulim.
Is this because AMD has reduced its volume for Kulim, or is it because you have still capacity over there?
That is just one question. I take the question for this one. Maybe I start with answering on that. It is definitely not the case that AMD is reducing the volume. Definitely not. We are in the midst of ramping according to plan with the customer. As you know, I pointed this out during the presentation, we have set up this Kulim site at the very high end of our, let's say, of the standards when it comes to processes and manufacturing capabilities. We are designed here, we are designing the site really for these highest-end capabilities. We are proud to say that we are starting from Kulim supplying exactly in these hot areas like AI and HPC to AMD. That is number one.
Number two is we have started a couple of years back, three years ago, even when, let's say, the crisis began with the diversification of both application and customer. We are moving in this direction very successfully. That is why we have also onboarded customers, new customers in Austria. We will also proceed the same way in Kulim. It is not that AMD is reducing. It is more that we are utilizing our capacities or adding here and there specifically the one or the other thing to be able to serve from there a broader audience.
Okay. Thank you. May I add my second question? It is about factories again. They are partially financed by your customers, are they not? I am interested in how you account for them in your balance sheet.
Thanks for the question. We have decided to very transparently record the customer prepayments separately.
You will find them in our balance sheet. We have currently roughly high GBP 900. Let me just one second to give you the right number. It's a little shy of GBP 950. No, sorry, less. GBP 900 million. Sorry, I need to add those two together. And you will find those 911 is exactly. Thank you very much. You will find that transparently shown in our balance sheet.
Thank you.
We will start the second round. If you have a question, please press nine star to state your question. The first follow-up question comes from Daniel Lyon as the group.
Yeah, thanks. I would like to somehow look at the product development. There's obviously some commoditization in both PCB and maybe also substrate, at least regarding the mix. When would you expect actually in both segments to come up with new products or technological advancements to counter this effect?
Are you expecting in the coming years to just be able to reduce costs in order to keep up margin levels or bring up further margin levels in addition to scale, obviously? Has this really changed? Is the distraction of where the market is moving?
Mr. Schröder, will you start and I will continue?
Yeah, sure. I take this question. Thanks for the question. There are many aspects you touched here. Maybe I start with the aspect of the commoditization, specifically in the area of the substrates. Usually, we split when it comes to complexity in a couple of, let's say, subsegments. One is notebook client, one is server, and the rest is the high end. For sure, in the high end, and specifically also in the HPC server side, I cannot see any sign of commoditization. It is more the other way around.
There are, in the last one, two years, lots of activities with regard to more complex products, more advanced substrates even. It starts over from way larger form factors. It goes to multi-layer substrate. It goes to embedding in the substrate and so forth. There are lots of activities ongoing. Here, I can definitely say there is no commoditization to be expected. What is the, let's say, the role AT&S is playing in this environment? I believe we are, with our customers, pretty much on track when it comes to adding or implementing or even providing new opportunities in technology and even also operational opportunities. That's the aspect. There's the other area where it comes to client products, yes, there is something. Just as mentioned before, very much seen because of the price pressure in the market.
Even the volume recovery or the volume was stable year-over-year somehow, but the price hits very hard. That is why these cost-saving and cost optimization programs I also referred earlier will be further executed. We are going to deliver in this current year, most likely, EUR 130 million additional bottom-line impact savings. It is, of course, not just only from the substrates. It is the entire AT&S, but we are having an intense look and adjust the costs and our operating costs constantly. The margin question you also incorporated here, we do believe that once we are at a ramp-wise at the various sites on target, because during the ramp, of course, you have some negative impacts because of productivity and running costs and startup costs and so.
We do believe that we can, with our setup, with our structure, with our efforts in terms of productivity and cost-own activities, that we are able to also maintain or even increase the margins over time.
Thank you, Mr. Schröder. I will take over now, Michael Mertin again. You should expect, and you can expect also a statement from my side, especially on the question of innovation and what it means for us now and in the future. Even if I am just on board for two weeks, one of the first things I did is visiting and having a very close look to our new investment here in Austria, in Leoben, Hinterberg, in the new site. This new site especially is designed and equipped for both for absolute front-end production. It is more than state-of-the-art.
It's really best what you can have in technology for volume production of the best technologies you actually have. Secondly, there's a strong investment already done in R&D, in equipment, in R&D, and in people as well in that site. This goes, as I could see, hand in hand, closely, directly next to each other so that we have kind of an R&D process here, what is directly close to serial production for the latest generation of product. Furthermore, maybe some of you know that my technical background is in lasers, optics, equipment, and in the entire lithography business. I have a little bit of an idea what can be done with all that kind of technology, the processes, and the know-how, the infrastructure. The know-how of the people around here is great. This was absolutely the biggest positive remark and impact for me in the first days.
We have an excellent experience here. My first talks here to the R&D people is that we will create a roadmap on what we can do here in the future. This will be part of our strategy for continuous growth and delivering profit in the future. As you said, it's absolutely a demand that we have to look for value-add and not just for cost-down. We have to do both. I will inform you continuously in the future exactly about this strategy and how it will be materialized. Please give me some time for that. It's part of my personal agenda.
Sounds great. Thanks.
The next follow-up question comes from Gustav Fröberg, Berenberg. Please go ahead.
Thank you. Just a quick follow-up from me on the pricing discussion.
Are you proactively cutting prices to help fill fab utilization, or how are you going about your pricing strategy given utilization levels are sort of, as quoted earlier, around 60% and you're ramping in Malaysia?
I'm sorry. I take this question. Of course, the price pressure entirely for the substrates is coming from the overcapacity which is in the market. Even so, we do see, and that's why we have set up our site in Kulim and also in Austria, specifically I mentioned before, to the higher end, to their niches. In these niches, the growth opportunity and also the price segments are different. Those trends are unbroken, and we do believe that this is also continuing in the future. I hope this answers your question.
Sure. Thank you.
Another follow-up question from Daniel Lyon Erste Group.
You've mentioned that stock is increasing in the substrate products. How do you expect this to play out on the price pressure? Do you expect it to remain on the current levels? Would you also expect your cost-cutting efforts to outpace the price pressure that you're currently seeing?
What we—okay. Petra,
please. No, no. Ingolf go ahead. Then I'll add my point later.
Okay. When it comes to the inventories, what we can see, and this is, let's say, official reporting from some of the semiconductors, there is a visible increase specifically at the Q1 calendar quarter 2025. This is visible for inventories on the Intel side and as well also on the AMD side. This is coming mostly from client products. It is not from server, advanced substrates, or AI-related topics.
The client volume is indicated and projected over the next period by many researchers and market studies, market intelligence, slightly increasing, slightly growing. That is why we do believe over the course of the year, it will balance out. It will level to a normal level. Do we expect additional price pressure from that? Let's put it that way. The price pressure in 2024 was very severe and very massive. There is an end. Let's put it that way. I can hardly believe that this is in a significant or in the same magnitude like we had it last year or over the last two years, actually. I believe there is a bottom reached and that there will be a stabilization on that level.
Nothing to add from my side. Thank you, Ingrid.
Okay. If there are no further questions, we will conclude today's conference call.
Thank you for your participation and questions. If you have any further questions, please feel free to contact our IR team, Johannes Martner and me anytime. Thanks again and goodbye. Thank you. It was a pleasure meeting all of you.