Comet Holding AG (COTN) Earnings Call Transcript

Ladies and gentlemen, welcome to the Comet Half Year Results 2026 Conference Call and Live Webcast. I am Valentina, the Chorus Call operator. [Operator Instructions] At this time, it's my pleasure to hand over to Ulrich Steiner, VP, Investor Relations. Please go ahead.

Thank you, Valentina. Good morning, everyone, and welcome to Comet's webcast and conference call on the first half results 2026. Thank you for joining us. We appreciate your interest in our company and are pleased to have you with us today. Before we begin, I would like to draw your attention to the disclaimer included in today's presentation. During this call, we may make forward-looking statements based on our current expectations and assumptions. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the disclaimer. Joining me on today's call are Stephan Haferl, Chief Executive Officer; and Christian Witt, Chief Financial Officer. Following the prepared remarks, we will open the line for questions. With that, it is my pleasure to hand over to our CEO. Stephan, please go ahead.

Thank you, Ulrich. Ladies and gentlemen, good morning, and welcome to the presentation of Comet's half year 2026 results. We are pleased to have you with us and sincerely appreciate you taking the time to join the webcast today. Before our CFO takes you through the financial results, I would like to provide some context on the macroeconomic environment and the key developments across our end markets during the first half of the year. This will help put our performance and the business trends we have seen over the past 6 months into perspective. Let's start with a high-level look at the performance of the first half of 2026. We have delivered solid net sales growth with a year-on-year increase of 5.6% for the first half of the year. More importantly, we have seen a significant acceleration in momentum from the first quarter into the second quarter of this year with net sales growth surging to 25.7%. This increased dynamic underscores the strength of our business model and the effectiveness of our strategic initiatives in capturing market opportunities. On the profitability side, we continue to expand our margins despite ongoing currency headwinds. This is a testament to our high operating leverage and increasingly to the success of our efficiency improvement initiatives. Our efficiency program remains on track and is expected to be fully implemented by the end of 2027, resulting in a projected sustainable EBITDA improvement of CHF 20 million to CHF 30 million per year from 2028 onwards. The strength of our order book is another positive indicator of future growth. Our book-to-bill ratio stood at 1.48 for the first 6 months, up from 1.36 at the end of the first quarter '26, reflecting robust demand and a healthy order pipeline that supports our net sales outlook. In addition to the good progress in our financials, I'm excited to announce the completion of our new Penang manufacturing facility. The investment resulted in a cash outflow of CHF 19.3 million in the first half. We are preparing to ramp up production and initiate product qualifications in the second half of the year. This facility will expand our manufacturing capacity, enabling us to meet growing customer demand and support our long-term growth strategy. In summary, our strong net sales growth, margin expansion, operational efficiencies and strategic capacity investments provide a solid foundation for sustainable value creation. Although our first half ROCE of 8.7% was below our cost of capital of roughly 9%, we expect to generate positive economic value for the full year 2026. We remain focused on executing our strategy with discipline and agility, confident in our ability to capitalize on market opportunities and drive profitable growth. With that in mind, let me now provide an update on the market environment and the key trends shaping our business, focusing first on the semiconductor and electronics sector, followed by an overview of other key industrial segments. The market environment remained highly favorable throughout the first half of the year with sustained positive momentum and strong performance across all regions. Growth continues to be driven by structural demand for AI infrastructure, advanced packaging and leading-edge semiconductor technologies. Reflecting this stronger-than-anticipated market environment, industry forecast for wafer fab equipment were revised several times to the upside during the first half, underscoring the strength and resilience of the current investment cycle. Overall, the semiconductor and electronics market remain a dynamic space with innovation and investments driving robust demand and promising opportunities ahead. Turning to other industrial sectors. The picture is mixed. In manufacturing, industrial activity remained subdued throughout the period, reflecting ongoing trade tensions and persistent differences in regional economic performance. While demand varies across geographies, the overall market environment remains cautious. In security, we continued to see strong momentum driven by increased investment in critical infrastructure protection and the growing need for resilient security solutions. These structural trends continue to support long-term demand. Finally, in aerospace and defense, market conditions remain favorable. Commercial aviation continued to benefit from high aircraft utilization and sustained demand, while defense market was supported by a further increase in government spending, providing a solid backdrop for growth. In summary, while the semiconductor and electronics market are expanding with strong growth drivers, other industrial segments present a mixed landscape. So with the market environment in mind, let's now look at how we were performing. Each of the 3 divisions, Plasma Control Technologies, Industrial X-ray Systems and Industrial X-ray modules have made significant progress, contributing to our overall growth and strengthening our market position. Let me begin with the PCT division, which continues to drive strong growth for our company. We're proud to report record orders and robust demand across PCT's product line. This momentum is a testament to the division's innovation and market relevance. A key highlight is the advancement of our Synertia platform. This cutting-edge solution in boosting customer engagement and enhancing our competitive position in the market for radio frequency generators and matchboxes. Synertia's capabilities are resonating well with clients, opening new opportunities and deepening existing relationships. To support this growth, we are rapidly expanding our workforce and investing in infrastructure. Notably, the new manufacturing plant in Penang is coming online, which will significantly increase our production capacity and enable us to scale efficiently to meet rising demand. Turning to the IXS division. We have seen remarkable progress over the past period. The division more than doubled CA20 purchase orders compared to year-end 2025, reflecting strong market acceptance and customer confidence in our offerings. The division has now received in excess of 10 orders with an ever-increasing funnel of further opportunities for its innovative X-ray system, especially designed for defect recognition in the semiconductor industry. We have also expanded the CA20 product portfolio with solutions for specific applications in the semiconductor industry, enabling us to enter and compete in new markets while positioning IXS for sustained growth. Additionally, through focused cost optimization and restructuring initiatives, the division has improved profitability. These measures have enhanced operational efficiency and will support long-term financial health. Finally, the IXM division has delivered solid sales growth, driven by strong demand in selected markets such as security. The manufacturing segment within IXM has shown signs of recovery supported by government initiatives and increased defense spending. These factors have helped stabilize and grow our industrial business. Moreover, IXM has improved its market position by focusing on quality and delivery excellence. This commitment has strengthened customer trust and differentiated us from competitors. With this overview, let me conclude with a summary of the first half year. Now in the first 6 months of 2026, we have laid a strong foundation for future growth and significant upside remains as we continue to execute our plans. As we expected, sales gradually improved throughout the first half of the year with acceleration gaining momentum as we move forward. Our PCT division delivered a solid performance, benefiting from an accelerating market recovery. Demand across our product lines has strengthened, supported by a broader upswing in the semiconductor sector. Notably, this recovery has expanded into the NAND segment, but mainly driven by data centers and not by volume markets such as smartphones or PCs. At IXS, the strategic repositioning and restructuring efforts we undertook are beginning to show tangible impact. Overall, the growth driver products, CA20 and Synertia are building momentum, contributing to an increasingly positive outlook. Looking ahead, we remain confident in our ability to sustain this upward trajectory. The foundations we have established, combined with ongoing market recovery and internal improvement, set the stage for continued growth in the second half of 2026 and beyond. And before I go into a more detailed outlook of what we expect for the rest of the year, I hand it over to our CFO for an in-depth discussion of the figures. Christian, please take over.

Thanks, Stephan. Good morning, everyone. A warm welcome to our half year results presentation also from my side. Thank you for joining us today. I'm pleased to provide a deeper look into our performance during the first half of 2026 and share insights into our financial outlook and priorities. Our top line growth was driven by strong performance in the PCT and IXM division, complemented by solid results in our X-ray systems. This combination has contributed to a robust net sales increase compared to the same period of last year. We are also pleased to report that our gross margin has returned above 40%. This improvement is primarily the result of the operating leverage that kicks in with increasing volumes, and that's despite exchange rate headwinds, which we are still facing compared to the first half year of 2025. Our ongoing efficiency program is progressing as planned. And as Stephan already mentioned, will bring us cost -- our cost base down, resulting in a projected sustainable EBITDA improvement of CHF 20 million to CHF 30 million per year from full year 2028 onwards. Key measures include process improvements in various core processes and leveraging our new hub in Penang, not only to expand production, but also to build out non-production functions there. As we look ahead, the investment phase for our new facility in Penang is largely behind us. By the end of 2026, we expect most of the planned investments to be completed. As a result, we expect to leverage the benefits from the facility and the production capacity and to return to strong free cash flow generation in 2027. As we look ahead, our focus is clear. We remain committed to profitable growth, which includes harvesting the returns from the investments and the hard work of recent years. We have built the foundation, expanded our capacity and are entering new markets, namely the RF generator market with Synertia and the advanced packaging inspection market with CA20. Now disciplined execution is the key. By managing the ongoing upswing with focus, operational excellence and discipline as well as expanding the commercial success of our new product lines, Synertia and CA20, we will unlock the full profitability benefits of those investments and create sustainable value. We will continue to make targeted investments in strategic projects, including research and development, the Penang facility and into executing market access topics. At the same time, we're implementing our efficiency program, which is on track to be completed by the end of 2027. Now let's take a closer look into the specifics of our financial results for the first half. We started the year with differing top line growth profiles across our divisions. The divisions, PCT and IXM, both delivered strong performance, achieving net sales growth of approximately 15% in constant currency. In Swiss francs, PCT still recorded growth of 6.9%, driven primarily by the ongoing recovery and strong momentum in the semiconductor industry, with increased customer investments and higher demand across key applications supporting this positive performance. IXM reported revenue growth of 10.6% in Swiss francs, reflecting continued strong demand for its new products. In constant currency, IXS grew 6.9% and remained broadly stable year-over-year in Swiss francs. Lower sales of legacy systems and markets from which we are strategically withdrawing were more than offset by higher sales of our CA20 platform. This product mix shift reflects the successful execution of our portfolio strategy and positions the business for stronger, more sustainable growth going forward. This is supported by multiple system orders received since January 2026 and is confirming our successful entry into the market. At the profitability level, both PCT and IXS have succeeded in improving the EBITDA margins during the period. For PCT, the improvement is primarily driven by the positive effects of operating leverage, which is typical during growth phases. As the division scales its business, fixed costs are spread over higher sales volumes, leading to enhanced profitability despite FX headwinds versus H1 2025. In contrast, IXS improves its operational performance, thanks to restructuring measures implemented in the second half of 2025 and a better product mix. These initiatives have optimized processes and reduced costs, contributing to margin improvement. However, IXS remains EBITDA negative at this stage. This is because we continue to invest significantly on the same level as in the last 2 years in expanding the product portfolio in the semi space with CA20, as previously outlined by Stephan. The division plans to maintain double-digit million investments in 2027 with breakeven at the EBITDA level for CA20 product family expected latest in the fiscal year 2028. Turning to IXM. The decline in EBITDA margin is entirely due to currency headwinds and will improve in H2 2026. Let's now turn to some key operational KPIs. Revenue increased by 5.6% in Swiss francs to CHF 239.8 million. And on a constant currency basis, it grew even more strongly by 12.7%. The negative impact of U.S. dollar exchange rate will ease in the second half year, provided the exchange rate remains at its current level. Gross profit margin returned to a range we are used to, that means above 40% after some weakness in 2025. This was driven mainly by operating leverage that overcompensated for negative FX impact. In addition, we implemented initial price adjustments, which we plan to selectively increase further to offset inflation, resulting in higher -- from higher input costs, especially for transportation and raw materials. Thanks to the higher gross margin as well as our efforts to keep cost at constant level, EBITDA grew far faster than sales, namely by 36.5%, resulting in an EBITDA margin of 13.1% versus 10.1% in H1 '25. The costs associated with our efficiency program and the move to the new facility in Penang amounts to CHF 4.5 million in the first half year. Without these investments, the EBITDA would have reached CHF 25.9 million or plus 56.1% on a comparable basis with a profit margin of 15%. For full year '26, we confirm the expected negative impact of approximately 3 percentage points from both initiatives or in absolute numbers, around CHF 15 million to CHF 18 million on the EBITDA margin, most of which will, of course, be spent in H2 '26. At the bottom line, net profit increased slightly less than EBITDA, namely by 33.4% to CHF 13.5 million from CHF 10.1 million last year, reflecting roughly CHF 7 million higher tax expenses year-on-year that could not fully be offset by significantly better financial results of minus CHF 1.1 million compared to minus CHF 3.4 million in previous year. Regarding returns on capital employed, there was a slight improvement. While profits were higher, capital employed also increased primarily due to the higher inventory levels amid the semiconductor upswing and the addition of the new building in Penang to the asset base. Looking ahead, we expect to more than exceed our cost of capital in financial year '26, thereby creating economic value. Let's now move on to the key KPIs from the cash flow statement and the balance sheet. Our capital expenditure in H1 was notably higher than usual, amounting to 12.2% of sales. This increase was primarily driven by our biggest investment, which is the facility in Penang. This investment represents a significant milestone for us as it expands our production capacity and enhances our technological capabilities. It is our new hub in Asia, which positions us well to meet growing customer demand and is a cornerstone for Comet's future footprint. We anticipate that once the Penang facility is fully operational, our capital expenditure will return to a more normalized range of approximately 4% to 7% of sales. This aligns with our historic CapEx levels and reflects our ongoing commitment to maintaining and upgrading our existing assets while carefully managing our investment pace. Turning to cash flow. Our free cash flow was negative CHF 19.3 million in the first half of the year. This was primarily driven by higher capital expenditures, Penang, as mentioned, and the necessary buildup of inventory and receivables to deliver growing sales volumes. Net working capital and percent of sales is decreasing as planned, which will continue throughout the second half of 2026. As a result, our cash and cash equivalents declined and we temporarily moved in a net debt position. I want to emphasize that this is a planned and temporary phase, directly linked to our strategic investments. We expect the situation to reverse in the second half of the year, free cash flow as well as net debt position. This is driven by increased profitability and lower CapEx and net working capital increase than in the first half year of '26. Our strong balance sheet provides ample financial flexibility to continue investing in growth initiatives while maintaining a solid credit profile as recently proven in the reissuance of our CHF 60 million bond and a quite competitive margin of 170 basis points. In summary, 2026 is a period of significant growth, transformation and investments for Comet. We are delivering on profitable operational growth, accelerating our order intake for market entries like CA20 and start to ramp up our new Asian hub in Penang. We are thereby further strengthening our competitive position, drive improvement operational performance and cash flow generation, ultimately enhancing shareholder value. With that, I'll hand back to our CEO. Stephan, over to you.

Thank you, Christian. Let's now turn to the outlook. Having reviewed our first half 2026 performance, I would now like to share our perspective on the evolving market dynamics across our key sectors. The semiconductor industry continues to demonstrate remarkable resilience and growth potential despite ongoing geopolitical challenges. We expect a sustained growth momentum in the semiconductor industry. This upswing is underpinned by several factors, including ongoing technological advancements, increased demand for high-performance computing and the expansion of emerging applications such as artificial intelligence or 5G. While volume markets are recovering, the pace remains somewhat muted, reflecting a cautious approach by end customers amid macroeconomic uncertainty. Nevertheless, the overall trajectory is positive, and we expect this trend to continue strengthening in the coming quarters. A key driver of our optimism is the wafer fab equipment market, where market price estimates have been revised upwards several times this year. Industry forecasts indicate that WFE CapEx is expected to grow between 17% and 27% in 2026 compared to 2025. This level of investment signals strong confidence from semiconductor manufacturers in expanding and upgrading their production capabilities to meet future demand. Turning to our Industrial segment. The recovery is more gradual and selective. The manufacturing sector is experiencing steady improvement, although growth is moderated by ongoing geopolitical tensions, supply chain disruptions and regional economic disparities. In the Security segment, demand remains strong and sustained. The increasing complexity of cyber and physical threats, combined with accelerated digital transformation initiatives is driving significant investment in security solutions. In aerospace and defense, we are witnessing a continued production ramp-up and a robust aftermarket. Geopolitical tensions and evolving defense priorities are fueling increased investment in this sector. Overall, the market outlook for the remainder of 2026 remains positive, although growth dynamics varied across sectors. The semiconductor sector's broadening recovery and strong capital expenditure plans provide a solid foundation for growth. Meanwhile, industrial markets are improving selectively, requiring us to remain agile and responsive to changing conditions. Our diversified portfolio across high-growth and resilient sectors, combined with our commitment to innovation and operational excellence positions us well to navigate these dynamics successfully. This brings me to the final slide of my presentation, including our outlook for full year 2026 and quantitative guidance on full year 2026. Turning to the broader business environment. The semiconductor industry continues to be the primary engine of growth and opportunity for Comet. Semiconductor cycle remains strong across all regions. One particularly encouraging development is the starting recovery in NAND CapEx, although it is still linked mainly to data center applications. After period of cautious spending, NAND manufacturers are accelerating their investments, signaling renewed confidence in future demand for NAND. This recovery is expected to become an additional driver for the overall strength of the semiconductor equipment market. Order intake for semiconductor-related products and services remains at a high level, underscoring the continued confidence of our customers in the long-term growth prospects of the industry. However, we remain vigilant regarding potential sources of uncertainty, most notably the impact of geopolitical tensions on the semiconductor supply chain and industry dynamics. While these factors introduce some risk, we believe our diversified customer base and global footprint provides resilience against localized disruptions. In this dynamic environment, our focus is clear. We are committed to capturing significant growth opportunities ahead, but we will do so with discipline. Having invested substantially in expanding our capabilities and scaling our operations over the past years, our priority is now to harvest the returns from these efforts. Therefore, disciplined execution of our ramp-up is essential to realizing the full benefit of these investments. Simultaneously, we are driving the commercialization of our next-generation product family, Synertia and CA20. Innovation remains at the heart of our strategy, and we are advancing cutting-edge technologies that will enable our customers to achieve higher performance as well as efficiency and reliability in their applications. These new platforms will be critical to sustaining our competitive advantage and capturing emerging market segments. An important milestone in our operational strategy is the successful ramp-up of our Penang site. The start-up of a new manufacturing facility is a complex process that requires careful coordination across internal teams. Additionally, we are on track to complete our efficiency program by the end of 2027. This program is designed to optimize our cost structure and operational processes with a targeted positive impact of CHF 20 million to CHF 30 million per year from full year 2028 onwards. Looking ahead, given current market conditions, our operational plans and the enhanced visibility we now have, we are providing quantitative guidance for fiscal year 2026. Net sales are expected to be in the range of CHF 540 million to CHF 570 million. The EBITDA margin is anticipated to be between 14% and 17% of net sales. This figure includes one-off items amounting to approximately 3 percentage points. Excluding these one-offs, the EBITDA margin is expected to be in the range of 17% to 20%. Now this guidance reflects our confidence in the strength of the semiconductor cycle and the effectiveness of our growth and efficiency initiatives while also acknowledging the potential impact of external uncertainties. We remain mindful of the geopolitical and macroeconomic challenges that could influence the industry, but we are confident in our ability to navigate these complexities through disciplined execution and a diversified business model. With these final remarks, I conclude our presentation. I would like to thank you for your attention and now open the floor to questions.

[Operator Instructions] The first question comes from Martin Marandon-Carlhian from ODDO.

My first question is on the order intake. So based on the H1 book-to-bill, Q2 order seems to be around CHF 210 million. So first, do you think that kind of run rate is sustainable for the following quarters? And if that's the case, it seems to imply, is there a lot of conservatism in the guidance or that some orders will be for '27? So is that a fair assumption there? And I have a follow-up.

Thank you for your question. Christian, do you want to take that answer?

Happy to do so. First of all, the guidance is what we -- where we want to come out, what we expect to happen. What do we expect for H2 in terms of order and delivery pace? We will, of course, have more deliveries in H2, and we will also have a continued good order flow in H2, leading to a reduced book-to-bill for H2 versus H1 because H1 was a bit extreme, but a very strong continued order flow is what we expect in H2. So I think that -- I hope that answers your question. Yes, we expect a continued good order flow. Yes, we will deliver more than previously. That will result in a slightly lower book-to-bill for H2.

Okay. And is there any orders for '27 already or it's all for '26?

Yes, we have. Look, there is -- it depends. And the divisions are quite different there. In PCT, of course, you have a couple of customers who place a 1-year order now. So it will not all be delivered at the spot when we can deliver, but that will be delivered over time. And then you have other equipment. Some of the IXS equipment has a short lead time of 6 weeks. If you have a project with a customer where you develop the final product with the customer and then sell it that might have a delivery time for more than 6 months. So I think that's a mixed picture. And yes, we have some orders in there for '27.

Okay. Very clear. My second question is on pricing. So I understand that you did not really increase the prices for a long time. So what's your strategy around pricing today? And if you implement some price increases, when do you think they will be visible in the P&L? And also, if you could give some color on whether it could concern some of the majority of the products or just a section of products and what type of magnitude of price increase we could potentially expect?

So maybe I'll take the first part of it. In general, we are definitely committed to value-based pricing. Now having said that, we have already started to adapt prices across the full product spectrum since the beginning of the year, and we will continue to do so going forward in order to adjust for inflationary pressures that we are feeling on the input side, but also on the transportation side, as I think Christian already mentioned earlier. Christian, do you want to add and give some more color to the question?

I think as you mentioned, it is inflation-driven. It is also different from product family to product family when these things happen and how they happen. But in general, we expect that some of the price increases are included already in H1. Part of it will come in H2, and we will see that as a continued trend. It is not something which happens once and then we jump. It is rather something which happens gradually and continues as part of how we deal in a true partnership with our customers.

Okay. And the last one, if I may. The last one is on Synertia. I mean you mentioned in the press release a significant increase in qualification and customer engagements there, especially for the matchboxes. So what does it mean exactly? Does it mean we get closer to an important high-volume order there? And also, does it concern not only existing customers, but also new customers?

Yes is the answer to both questions. So we are working on delivering at the higher volumes and the orders that are coming in are now from a growing spectrum of customers also geographically.

Next question comes from Oliver Wong from Bank of America.

I just wanted to kind of ask about the orders. I understand, not asking you guys to kind of guide on orders, but just wondering kind of from your experience since, I guess, given that we are sort of in the beginning of the semis ramp, and let's say, you did CHF 210 million in Q2. In general, over, let's say, the medium term, would you expect orders to kind of trend upwards in the coming quarter or at least stay at around this level? And then just wondering if you can give any more color on the composition of the orders in Q2. Is there any reason, any one-offs or any reason why perhaps it would potentially trend down?

Thank you for the question. I can maybe take a first stab to this. And clearly, it is based on the same information that you have and is a little bit in the realm of speculation. But when you look at how the projections of our principal customers look like, both in the front end for wafer fab equipment, but also for advanced packaging. With all the CapEx plans that they have, we anticipate that we will see a continued growth in orders at least for a couple of few quarters before it perhaps starts to, let's say, plateau. But again, this is how we look at it and also interpret the messages that we receive from the growing number of customers that we have across the value chain. Yes, I'll pause here. Christian, do you want to add something from your perspective?

I'd like to add one point. As Stephan pointed out, this is like the fundamental ongoing demand, which is increasing, steadily increasing and there's a strong pull. Some have been faster, others have come later, but they are all there and they are all pulling. So that's very clear. We have had a couple of stockpile orders in the first half year, as just mentioned. So on an absolute number, we do expect that H2 is rather higher than lower than first half year. But the stockpile orders and give me everything now what you can type orders, you get that in the beginning, you don't get that a quarter later again. So on the absolute numbers, the orders might increase a little bit, order intake in the second half year, due to the fact that we have a couple of stockpile orders in there, as just discussed with colleagues from ODDO. And as we will have stronger deliveries in H2, that's why the book-to-bill will go down in H2 versus H1. When we look at it, how we position Comet and why we see the orders and the strong increase in order intake coming and continuing, we are building capacity. We are expanding capacity for '26, for '27 and beyond. That's what we are doing that because we see the customers' demand. And I think that answers on the one hand or clarifies what is the underlying demand and where do we see a couple of, I wouldn't call it onetime effects, but stockpile orders, which we frequently have when such a ramp is starting. So that expectation for H2 on the absolute terms might not be much higher than H1, but the fundamentals behind it are clearly growing. That's what we expect. That's what we prepare for.

Maybe I can add 2 more points there. I think we haven't seen yet the full development of the NAND CapEx in our books. As I mentioned in my speech, we are seeing that the cycle is starting, coming to Comet. And so I expect orders on the NAND side to continue growing in magnitude. That's the first point. And the second point that I can allude to is what we see on the side of our sales opportunities funnel now across the value chain, so including advanced packaging, the funnel is growing much faster, much faster than our incoming orders. So there is a lot of potential for further incoming order growth.

Okay. That's very helpful. But just to clarify, so the stockpile orders was mainly in H1. And so for that reason, in H2, perhaps orders on an absolute basis will not grow too much more than in H1. Is that correct?

That's the projection we see at the moment. But very sincerely, in -- to look ahead, the speed of orders and the ramp to look 3 or 6 months ahead is something where we were all -- none of us were surprised by the ramp, but the pace of the ramp is something which has changed, I think, on a biweekly basis. So that might change this way, that way. But at the moment, it is as you described that we see it.

Got it. So for our models, we should project, let's say, CHF 210 million in Q2, perhaps there's a chance it won't be as strong on a quarterly level going forward.

As I said, half year 2 is rather higher than half year 1. On an absolute basis, when you take out the stockpile orders, then you have a clear increase, and that also shows the path towards 2027 and onwards.

The next question comes from Craig McDowell from JPMorgan.

Just my first question, I've got a follow-up as well. I wanted to ask on your manufacturing capacity in PCT. If we use latest WFE estimates in '28, there's sort of projections of north of [ $300 billion ] of WFE, and we assume your share of WFE remains stable, say, 45 to 50 bps that might imply PCT revenues around CHF 800 million. Can you comment whether with current and planned capacity, you'll be able to serve this kind of demand in 2028? And also if you could talk about your -- the supply chain into you, so downstream of you, how you're sort of managing that downstream supply chain to meet that kind of demand?

I'm not sure that we acoustically understood everything. So I'm trying to interpret what you asked. One thing that I did understand is your question concerning mid-term capacities, if I'm not mistaken. And there, I can confirm that with the build-out that we are completing in Penang, we have capacity till 2028, which will be comfortably above an output of CHF 1 billion per year. Now apologies, acoustically, we did not or at least I did not understand the rest of the questions. Christian, did you catch them?

It was around your suppliers into you, so your own component suppliers. Are they running at the same pace?

Okay. Now, I understood. So whether or not we have choke points in our own supply chain. At this point in time, knock on wood, we have no serious choke points in our supply chain. Obviously, we are working on escalations as is customary in an upswing on an everyday basis with definitely a handful of our vendors. But so far, all these choke points have been able to be managed, and we are not suffering like, for instance, back in 2021 and '22, supply chain near disruptions that caused prolonged delivery times on our side to our customers because of missing material.

Super. And then as my follow-up, I wanted to ask in addition to the strong orders, can you speak about consignment inventory at your customers? What level of growth are you seeing and in what product categories? And do you factor in consignment inventory draws on your customers in your '26 guide?

Yes. Christian, do you want to take the consignment question?

Yes. We do see clear increases in consignment. The customers request that we put multiple into what we call the consignment bins than what we had there before. Customers are very stringent in monitoring that they get what they need. And sincerely speaking, that's very good. If our customers manage the upstream well, that's good for us as well. So that's what we see on the consignment. And when you look to our stock movements from the beginning of the year to now, a good piece of the increased inventory is consignment as demanded by the customers. What we are also watching is, is it just sitting there or is it getting used? And we see that the stuff flows. So they're managing their stock and their supply chain very well. That's good. We increased the bin sizes, so how much consignment we have at the customer site. And we see that the customers are continuously using it and increasing their output on our products. So that's what we observe, and it's confirming what we mentioned before, what's our plans for H2 and beyond.

The next question comes from Martin Jungfleisch from BNP Paribas.

I have 2, please. First one is really a follow-up on the capacity ramp. I mean your guidance kind of implies CHF 350 million or so in revenues in the second half. Just how should we think about the phasing here? Is it more like a gradual increase in Q3, then maybe like around CHF 170 million, CHF 180 million in Q4? And with orders being around CHF 200 million now, what do you think about the ramp phasing in Malaysia? Can Q4 -- or can you typically by Q4 have an output of CHF 200 million or more? That's the first question.