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Michel Gerber: Good morning, everybody, and welcome to VAT's Fourth Quarter and Full Year Results Presentation. We have today with us, as usual, our CEO, Urs Gantner. I think it's the second or the third time, right? Yes, the third time that you are doing this since you took over. And of course, Fabian Chiozza, whom you know very well, too. We published our annual report, the media release or presentation this morning. I apologize for some delays for you who got it in the inbox directly at a somewhat later stage, only shortly before 7:00, not 6:30. But the e-mail provider, EQS had issues with sending out the e-mails to the recipients on the mailing list. So on Bloomberg Reuters, you already have seen the news, but you only got it a little bit later in your personal inbox. So apologies for that. So without further ado, I would like to hand over to Urs for the presentation together with Fabian. Then we have the normal Q&A session, taking questions from the room, but also from people on either the webcast or over the phone. And then after that, for those who are here in present, they can then also join us for a small buffet lunch later on for further discussions. So with that, Urs, the floor is yours.
U. Gantner: Thank you, Michel. Thanks for the introduction. And also from my side, welcome. [Foreign Language] Happy that I see more and more faces that I already know. So as Michel mentioned, my third time now, and the last 2 years, I was always promising that the ramp was coming, right? And what you will hear today, the ramp is here. So it's certainly a special day also for me today. So you have -- we released our numbers already early in January. So you will notice no big deviation on that, no big changes, except that we can really confirm the ramp is coming. I always say semiconductor in any part of the cycle, in any phase of the cycle, it's really an exciting field and an exciting industry. At the moment, it's really vibrant. We see that with our customers, with the end users. You see the numbers are going up almost every day, what will happen. And often, it's not really rational what we hear. So there will be a kind of a leveling out over time. So what we show -- what we -- today, we will go through the highlights shortly, review on 2025. And then I will hand over to Fabian, who will do a deep dive in all the financials and then maybe the most exciting and what you are most interested in the outlook for 2026 and beyond that. We will also have enough time in the end for Q&A. So the same setup for those who are online, use the chat box. And of course, we will also answer the questions coming up here in the room. So let's turn to Slide #4 on the presentation that is also online available. So 2025 was a year about a broad adoption of the AI investments. And also this turned in the end in wafer fab equipment. Often, we say semiconductor is cyclical. But if you see the wafer fab equipment, basically in the last year, it was always a growth and then it kind of went on a plateau and then it grow again. And at the moment, we are just at this stage where we strongly believe that the growth will come again. Also for 2025, wafer fab equipment was a new record. Depending on the models, it was roughly USD 115 billion means roughly 12% growth compared to 2024. For VAT, the highlights, 2025, it marked our 6 years anniversary. So we had some celebrations, of course. And while the best gift we could give ourselves is come up with new records. And we had new records last year. One of it is factory output. It was the record high in factory output. We had new records in spec wins, specification wins. So this is our future business. And also financially, we had a fantastic record in free cash flow. Orders, what you see we were kind of flat year-over-year, but actually about 6% up on constant currency. Sales was up 14%. And also here, constant currency would have been up 20%. And as I mentioned, innovation, this is the driver. This is -- also my heart is this innovation. This guarantees that we are ready for the future and shows our power and the collaboration with the customers with 150 spec wins and also a record in investments in R&D. It underlines that we are investing in the future. Last year, we also launched new products called our [ Mod ] Horizon 2 products, we call it. So the first time we are also reporting our gas inlet, the ALD valves that were launched last year and also very interesting for us, the inauguration of the innovation center. So we have now a new home, a new home where all the engineers are under one roof, very close to operations. And this is the strength of VAT that we bring people together and innovate. So we not only had a new building in Switzerland with the innovation center. We also had the opening of our new facility in Romania. It acts at the moment as an internal supplier, but also gives us much more flexibility in the long run to scale up in this region. Financially, Well, we had headwinds. You know that pretty well. But despite these headwinds, I think we came up with very strong results with an EBITDA of 30%. And as mentioned, with a free cash flow of CHF 230 million, which is a record for VAT. This also shows resilience. Whatever happens outside in the world, our flexible operating model is agile. We can adapt fast to come up with outstanding results. And now before we move on, I would also like to take a moment to thank the global VAT team for these outstanding results. Their commitment and agility, they know they have to react fast. They know our market. And I already mentioned them this year, well, it's going the other direction, but it's not being a quiet year at all. So I often say once in such a phase of the cycle, it's like a diesel engine that was idle for some time. When you start it again, it makes some noise and smoke and then it runs smoothly. And I think this is how the industry works now, a lot of expectation going forward, but it will also a few months that it runs smoothly. On Slide 5, we see the split in our segments. So there is no big change. So it is roughly 80% in valves and 20% in service. About 80% of our service -- of our business is in semiconductor with about 20% in the service business. Regionally, you see it's more and more moving to Asia. So almost 3/4 of all our business, our products go into that region. That's, of course, the customers in Asia or Western OEMs that are Asian-based. So -- and in China, still about 30% of the business is in China. You might remember that after half year, that ratio was even higher so that China business was a little bit half year, first half year front-loaded and then muted or the others did pick up in the second half. So overall, let's say, 1/3 of the business going directly into China. Yes, on Slide 6, we update our market share numbers for our core products for our valves, our vacuum valves. And here, these underlying numbers are still preliminary, so not completely finalized from the market research. But we continue to have a very comfortable market share of 71% in semi and semi-related. And if you would go only in semi, valves, it remains on the 75%. Outstanding still is our market share in control valves. So the most advanced products, it is clearly above 80%. As we go to Slide #7 and also here, it's important to mention that all these providers are still gathering also the data for wafer fab equipment. We see that the growth was roughly 11% year-over-year. Interestingly, we see that the vacuum-related wafer fab equipment did win about 5 percentage points. And this is also what we always told if the leading edge is kicking in, more and more vacuum will be required, and this is what we see also compared to 2024. Also spending in new technologies, so we differentiate between the node size below 7-nanometer and above. Also here, we saw a growth of 37%. And China, also an interesting lost a little bit, but actually in absolute dollar value was kind of stable. It's also important to mention that some of these investments, not all of these investments are greenfield. So they are not all of them are equipped new fabs. It's also a lot of upgrades, especially last year in the NAND business, there was a lot of upgrades and some of these upgrades, we could -- we are not participating because it's not related to the vacuum systems. We will have some more details about the wafer fab equipment and how this will evolve in the third part of our presentation in the outlook. On Slide 8, we see one of another record. I already mentioned the growth in spec wins. So we achieved about 150 specification wins. About 70% of it is in the semiconductor-related environment and about 18% in our so-called adjacent products. This means the advanced modules, motion components and the gas inlet valves. Well, what does that show -- what does it mean to me? It shows that our customer, they are, first of all, feel comfortable to work with us on IP-related topics and prepare the future with us. And secondly, it demonstrates that we are spec-ed in and we are ready and will grow once the adoption of these new tools go to the market. Growing with the adjacencies, I mentioned it's about 18% of the spec wins also helps us to increase our share of wallet on the tool. So we have a very high share on valves and with the adjacent products, we increase the share of wallet on the tool, and this is also a big part of our future growth story. So broadening the footprint across the tool architecture gives us resilience also in the long run. With that short feedback, I hand over to Fabian, who will give us a deep dive now in all the financial numbers.
Fabian Chiozza: Fantastic. Thank you, Urs. So good morning, everyone, and also a very warm welcome to those of you who are listening in on the webcast. 2025 was a year that demonstrated both the strength but also the resilience of our organization. We delivered solid results and made tangible progress on our strategic priorities despite operating in an environment that remained demanding and uncertain throughout the year. Volatile markets, external shocks and FX swings require continuous focus and disciplined execution. Against this backdrop, our teams performed exceptionally, managing complexity, adapting to changing conditions and ensuring ramp readiness. On the following pages, we'll take you through the financial highlights, key drivers behind our performance and also the opportunities in 2026. Let's start with a recap of orders on Slide 10. Order intake 2025 amounts to almost exactly the same number as the year before, CHF 1.033 billion, up about CHF 60 million or 6% on constant currencies. Seemingly no change in order flow. However, the underlying trends have seen a shift whereas '24 and also the first half of 2025 was mainly driven by mature nodes and China. The acceleration in leading-edge build-out was noticeable in the second semester of last year. Furthermore, global service, a key leading indicator for fab activity, saw a 76% rise in retrofit orders in the second semester and a 21% increase in demand for consumables as memory fabs are running at higher utilization rates. Let me also remind you about the preorders we mentioned in the high-level release mid of January. This CHF 30 million to CHF 35 million were predominantly driven by price increases for 2026, which come into effect during the current quarter. On the next slide, we show the development of orders in Q4 and full year. The number that stands out is the acceleration of order intake in Q4. Orders grew 28% quarter-on-quarter. Book-to-bill increased to 1.2. This also helped the order book to grow 18% quarter-over-quarter. Sales were flat Q4 versus Q3 or just 1% up on a like-for-like basis. Overall, for 2025, orders shared a mixed pattern with a trend of increasing leading-edge activity accelerating orders but also sales. Moving on to Slide 12. As you know, adjacencies is one of our pillars of growth in order to deepen our customer intimacy and to expand our share of wallet. Adjacencies is thus a great indicator for leading -edge build-out and activity. As you can see, we saw a 23% growth year-over-year in adjacency revenue. At circa 9% of group sales, we are progressing to our target of 15% of total sales in the near term. We also added a tangible example of how we are expanding our content in a customer jewel. On the right-hand side, we see a generic schematic based on actual customer example of VAT gaining share by selling load locks and also transfer chambers, being able to offer our pin lifters and gas inlet valves on top of it. In the future, this approach will enable us to get to our target of 3% to 5% share of wallet. Why are we certain to reach this? Worth mentioned our 150 specification wins at the start. Around 18% of these were in adjacencies, providing us good visibility on future growth opportunities. Following last year's strong gross profit improvement, we saw a slight decline by 2 percentage points to 64%. The main driver was a reversal of our net working capital buildup we saw in 2024. Further pain points were the FX development with ongoing strengthening of the Swiss franc against all major currencies. Our continuous improvement program, DarWin, again yielded about 2% gross savings on gross profit, which not only softened adverse FX and working capital effects, but also compensated raw material price increases, such as our main commodity aluminum. On the next chart, 14, we see the stability of our EBITDA margin, testament to the resilience of our flexible operating model. As previously discussed, significant working capital reduction of 8 percentage points versus prior year down to 25% over sales burdened our P&L. We adapted our structure to market demand and established our global business service hub in Malaysia to cope with ongoing FX challenges. Together with our DarWin program and favorable hedging gains, we increased the H2 margin to 30.4% while at the same time, continuing our R&D spend that reached also a record level of CHF 75 million, up 22% versus prior year. Let's now get to the bottom line with some of the other financials on Slide 15. D&A increased by about 11% on the back of our front-loaded infrastructure investments. EBITDA thus reached CHF 273 million, a margin of 25.4%, slightly below prior year. The net finance result is reflecting the ugly side of FX developments with a revaluation on bank balances and intercompany financing. Taxes slightly increased to 16.7% versus 16.1% a year before, mainly due to higher profit share earned abroad with higher statutory tax rates. Taking all of that together, net income increased slightly to CHF 214 million or an EPS of CHF 7.15. Once again, I want to remind you about the economic value creation potential of VAT. We measure this as return on invested capital and cash return on invested capital. Both metrics despite record R&D spend and continued ramp readiness preparations are significantly above our weighted average cost of capital. With major CapEx projects in place and operating leverage to kick in during 2026, we expect continued expansion of both KPIs in the near term. Free cash flow generation is shown on Chart 17. Free cash flow increased to all-time record levels of CHF 230 million, up 26% year-over-year. While VAT always demonstrated its strong cash generation ability, 2025 certainly was a year of strength. VAT increased free cash flow as a percentage of sales to 22% and the conversion rate rose above the long-term average to 72%. Slide 18 addresses our CapEx, which amounted to CHF 68 million in 2025 or about 6% of sales. Last year, we have completed major infrastructure projects around the world, including our innovation center in Switzerland, moved into a new enlarged factory in Arad, Romania, and established infrastructure in Malaysia to further expand in a targeted manner as demand builds. Our commitment to customers of 30% quarter-over-quarter ramp-up capability is in place, and we work closely with customers to ensure our part of the supply chain delivers. R&D reached, as I said, new records of CHF 75 million, up 22%. Spec wins up 14% to maintain VAT's technology edge and drive future growth. When summarizing the full year 2025 financial performance, we can state that our preparation for the ramp over the last years is complete. Major infrastructure needed to satisfy demand is in place. We maintained readiness for market growth over the year, focusing on current and future capabilities. We proved EBITDA resilience within communicated range of 30% to 37% despite internal and external headwinds. Strict financial discipline, focus on free cash flow generation demonstrated premature repayment of our term loan facility in January 2026 and the replacement through an incremental RCF facility. In this year, the start of the ramp is critical to get right, and we continue to remain disciplined around cost and monitor our customer requirements. We continue to build out core capabilities in close coordination with those requirements. We will maintain a high degree of R&D spend to ensure VAT retains its competitive edge to generate the next generation of products. We will also enter the last stage of our ERP project with the implementation of D365 in the sales and service entities during this year. Last but not least, managing geopolitical risks as well as mitigating continuing FX volatility will remain a key element of our financial steering. To conclude my remarks on a positive note, after maintaining a stable dividend for 2 years, we decided that the increased free cash flow allows us to also propose to distribute a slightly higher dividend of CHF 7 per share, up 12% compared to 2024. With that, I conclude my remarks on the financial performance, and I would like to hand back to Urs for the market expectations and the outlook. Thank you very much.
U. Gantner: Yes. Thank you, Fabian. Yes, I'd say, fantastic numbers. Congratulations to the entire team again. And now we are at the beginning of 2026. And can say that just at the beginning of January, it came for many of us a little bit as a surprise when the latest -- when we attended all the ISS, this is an industry strategy conference, always very early in January. And suddenly, this $1 trillion market where we were always postulating that this will come in 2030, suddenly came in that said, well, maybe this will happen in 2028. Some said, well, no, it will for sure happen in 2027. And the totally crazy one we already said, well, this is happening this year. So it's at least 3 years pull in. What you also see here that we postulate now that about in 2027, the semiconductor market, the chip market will grow to this USD 1 trillion. So quite an acceleration. Of course, one is based on pricing as well. You have seen that also chip pricing increased quite a bit over the last quarters and months. And secondly, of course, the build-out of the entire AI structure, so the sheer demand of chip contribute as well. So what we are entering now is kind of -- we call it a structural change in semiconductor. So the first step now is the creation of this new infrastructure. So all the data centers, what is invested now by the hyperscaler. I think it was about $400 billion last year and will nearly double for this year. So there's a lot of money invested in all this infrastructure for AI. And then we can also see, well, our -- today's devices, I think they will change. They will change. The AI will also be a kind of an inflection point that our smartphones, our laptops and I think I'm sure there will be a lot of creativity there that we can use then also the AI center and bring AI also to the edge. So this will be in a second wave that is coming. And so that means that there will be a multiyear of growth in semiconductor continuing. And what we see just at the moment, also 2026, there is a tightening of the chip manufacturing. So some of the fabs are already sold out since quite some time. And of course, this increased also the pricing. So this means investment must happen. Almost every day, these wafer fab equipment numbers are going up and up. So we are still kind of on a level that we say the 130 is a reasonable number for this year. But we already see now in 2027, the highest was about 180. Yes, maybe the demand would be here, but for sure, the infrastructure is not ready. So where they should deliver this 180, they need a fab, right? So maybe you already heard that some fabs, they're already buying old fabs because they don't have enough clean room. This is what they mean. They don't have the shell to put in all the equipment. So new bottlenecks are coming up. So -- but these, of course, are the interesting challenges to overcome because this is growth. And here, we have to align always with our customers, what do you need when shouldn't -- do not overshoot our time. These are the maps now at fab. We always postulated that as well. These are from semi organization. It's more than 100 fabs currently built. But this 100 fab, they are not enough for this $1 trillion. And if you go one decade to 2023 -- 2035, so 10 years ahead, then they already say it will be a $2 trillion market. So it's huge. So if you compare to normal industries with the GDP growth, semiconductor will always outgrow this market by the demand. I also have to mention here, we think computing is already mature. We are using it every day, everywhere. But historically, we will say that this is actually the beginning of the computing. So we are not yet there. We will change a lot going forward as well. Very interesting to be in that phase of growth, there will be, as I mentioned, challenges as well. The whole machine has to start. Supply chain has to start. There might be bottlenecks coming up. Industry is pretty small as well. So we know each other very well, and we will overcome all these challenges going forward. Now why all these investments are needed? Why AI needs now suddenly completely different tools and microchips. I think the main issue is an energy problem. that AI, the current chips are using too much energy that almost 50% of, for example, of a country would just use the energy for data centers on the AI use. This means we have to reduce the energy consumption of the chips, and this goes with miniaturization. Smaller chips and at the moment, we are at this inflection point of this gate-all-around technology. So for the last 12 to 15 years, it's always called FinFET. It's a technology and architecture of the microchips and now moving into gate-all-around technology. And why it becomes suddenly more challenging? Of course, first of all, it goes to the atomic size, atomic level. And secondly, what we try to show here on the picture, it's not only, for example, etching and deposition in one direction, but it goes in 2 directions. And how can you do that? Just try to drill a hole in one direction, yes, I can do that. But then suddenly go to the other way, it becomes challenging. And they are doing that, so that the fabs, the microchip manufacturers, they find ways to do things like that. That's art. For us, it means the purity level goes up, particle is very important and the matching of the chamber, matching of the component that they always behave the same way, it's even more critical than before. Often get asked about China as well. So how is China? So we have the, let's say, the Western world meanwhile, and then we have China. China is building up its own ecosystem as well. They are already clear #1 in all the mature chips. So in volume, they certainly are producing most of the mature chips. But of course, they strive for leading-edge chips as well. With the restrictions they got to that they don't get some of the technologies, they have to invent on their own to find -- to develop their own tools. Overall, wafer fab equipment in China will be probably flat with single-digit growth. Interesting will be that the self-sufficiency rate also on the wafer fab equipment tool will go up. Today, it's around 15% to 20%, depending on the application. And the clear goal from China is that this will go up to 70% by 2030. So this means a lot of innovation is happening in China and also Chinese OEMs, they need the technology from the West. They are working with component suppliers to make that happen. One word to our service business. Service, always the most profitable business. So we track that in the installed base, what kind of installed base we have in the market. So it needs repair, upgrade, consumable business. This kick in quite nicely in Q4 last year. And with the fab utilization now going up and almost being at the max, for example, for DRAM, also here, we will see quite a growth in this year. And also, we anticipate by 2030, the installed base of our valves will also double. So it's about the same doubling we had since the IPO in 2016. And now in the next 4 to 5 years, we will double again. And of course, the installed base is kind of the foundation then for our service business going forward. The non-semi business, we reported about 14% of our sales in 2025. So this is kind of -- we are focusing here on some critical vacuum applications. I always say it's kind of our scouting as well, what's coming up. So 20 or 30 years ago, semiconductor was very small as well. So you need some scouts and get the foot into the door if something is growing. Here, we see certainly growth in the field of scientific instruments, metrology also semi-related business in one way. Research is always very close to our heart at VAT as well because the first valve was delivered to R&D at that time as well. And of course, there, you see what's going on, what kind of application could make it to the industry and high volume. Interesting for us also the energy market. So of course, solar at the moment, muted, but this will come back maybe in 2027, 2028, all the nuclear business as well. So the uranium enrichment kind of a revival as well that everybody understands we need the energy and maybe more in the long term, fusion as well. So we are very deep in fusion technology as well. They need huge vacuum systems to run fusion reactor but of course, that's not in the midterm plan. But here, we learn about ultra-high vacuum application, extreme conditions. And I think that's the field we want to be in as well. A good example also so ADV Advanced Industrial, a lot of project business. Another good example for project business is the display. There is a lot of investments ongoing as well, especially in OLED. So in the future, all the laptops and all the eye-care relevant displays will be OLED, and there is investments ongoing, especially in Korea and China. And over the last years, we did win a lot of market share on these new tools. You see a picture and also the size of a human being, how big these tools are. It's massive. It's hundreds of meter vacuum systems where they produce these panels and a lot of investments going in there. It will remain a cyclical business as well, but it's always good in the long run that you can participate in such investment cycles. So summary, the ramp this year. I think that's the most important. That's exciting. And what we expect for 2026 will be new records again this time, records in orders, records in sales and again, records in free cash flow. So very promising for 2026. This is what we want to achieve. At the same time, we want to also improve EBITDA, EBITDA margin and net income compared to 2025 and this is all based on these investments now in AI, wafer fab equipment going up, fab utilization on record high that we have a service business and also ADV kicking in with some interesting markets. We keep investing about CHF 70 million to CHF 80 million in CapEx and also R&D investments will remain very high. This is our future. This is where we want to invest. So the guidance for Q1 is roughly CHF 240 million to CHF 260 million with a substantial above 1 book-to-bill ratio. This we can promise you already. Then 3 things you should take home from here. First, 2025 was a year of record for VAT. So looking back, especially factory output, we ramped that, and we are ramping again in our Q1 factory output. We completed major investments in R&D center in our facilities, record high in the R&D spend, so with record high of specification wins. And certainly, Switzerland remains the hub for R&D, new product development. The second, as I mentioned, 2026, finally, the ramp is here and coming. This will change the behavior in the market quite a bit. The USD 1 trillion semiconductor market is very close. So it's an acceleration in the market. We will ramp up the factory in Penang in Romania, but you always have to be also cautious, and we will, as Fabian also mentioned, invest very disciplined as well because we know the market. It can change tomorrow again. So we have to be ready and alert on and keep stay flexible. And beyond 2026, I think it's still a fantastic growth story. The sub-2-nanometer chip manufacturers will continue. As I mentioned, the FinFET was about 12, 15 years and now gate-all-around starts. And this is not one technology. This is again a road map to the next one. And this is just starting with all the challenges the industry will have, and we are very well positioned to benefit on that. With that, I think future is bright. I will hand over to Michel Gerber.
Michel Gerber: Okay. Thank you very much, Urs. What is always a little bit frustrating to me is when you start talking about the time beyond 2030. And unfortunately, we are not at liberty to give you yet too much detail about what's happening there, but I'm sure it's going to be very exciting. And maybe at the next Capital Market Day, we can tell you a little bit more. Anyway. Thank you very much.
Michel Gerber: So the Q&A, you know the drill. I'll take questions from the room. Carol will help us with the microphone because, as you know, we have people on the phone, we have people on the webcast. [Operator Instructions]. And with that, I would start here. And ladies first, Maybe I can give you mic closer.
Laura Bucher: Laura Bucher with Octavian. I have 2. First, very straightforward. On your outlook for Q1, you mentioned book-to-bill substantially above 1. So just trying to understand your use of the terminology there. Does that mean we should expect something similar to Q4 '25? That would be the first one.
U. Gantner: Yes, similar to Q4 is a good assumption, yes.
Laura Bucher: Okay. And the second one, you mentioned factory output increase, preparation for the ramp is done. Can you comment a little bit on the trajectory of the margin in '26, maybe something a bit more tangible than the outlook. We know there will be a big FX impact. Is there anything else you need to do from your side that would prevent you from reaching already the higher end of the guidance by year-end? Are you just waiting on volumes? Just looking for some comments there.
Fabian Chiozza: Yes. Thanks for your question, Laura. I think we have to disaggregate a little bit on the margin, what is gross profit and what is EBITDA because especially on the FX side, you have negative effects on gross profit. But then on the other hand, all your hedging gains support your EBITDA. So on a -- let's say, on a like-for-like basis, I would not expect any substantial impact from the FX going forward on EBITDA. Whereas on the gross profit, we will definitely see now a reversion of the negative impacts that we have suffered during the course of 2025 as we were reducing the inventory now going again into a ramp, I would expect there a bit in accretive development from trade working capital buildup. And then last but not least, as I have also mentioned, VAT has always been very exposed to strong operating leverage once we saw growth kicking in. And I mentioned that the capacity is in place. So I would expect our bottom line EBITDA margin and also to certainly hover in the, let's say, first half of the communicated margin band most likely towards the upper end of it.
Michael Foeth: Michael Foeth, Vontobel. Two related questions. The first one is if you can comment on your current lead times, if customers put an order in today, what's the -- approximately what's the lead time on those orders? And if you could also -- that's the second question, provide us with a sort of relate the Q1 sales guidance to the high Q4 order intake so that we understand why we're quite a bit below that -- below the order intake.
U. Gantner: Yes. Thanks for that question. Lead time, I think lead times are completely different than maybe some of you had in mind during the COVID time where there were clear shortages first in aluminum, then in chips and then in elastomers at the moment that supply chain certainly is ready. It doesn't mean that there might pop up other challenges as well, especially also if you see geopolitics as well. I never know what's happening there. But lead times are back to the 8 to 12 weeks normally. And anyway, with our large customers, we have our consignment programs. So there is always a buffer. I think the biggest challenge also for our customers at the moment is which configuration they will need when. And this already shows that at the moment, there's no way to just ship something. So we also need to know what kind of configuration they will need for their customers. And this also translates already a little bit in the second question. So as soon as it's not fully clear what configuration they will need for the production in which fab we cannot ship. So we can, of course, already ship the base. That's fine for high runners. But the specific configuration for this -- what I showed this gate-all-around technology, which is completely new. That's not 100% clear, and we need here close alignment with the customers. Furthermore, Q1 is always kind of also -- has also a seasonal impact as well with the many holidays, especially in Asia, and you have seen 75% of our business goes to Asia. And basically, some of the counters are really shut down for 2 weeks as well as we do, of course, for Christmas break. And I think this year, even Ramadan is also in Q1. So that is more a seasonal impact. So that's why at the moment, it's very positive on all the order intake, the collaboration with the customer, a very close alignment, what they need when. I think that's the message, maybe less -- the Q1 is now not the fantastic sales, but what we are doing now is ramping up capacity. Factory output will go up quite a bit in Q1, and this will then turn into sales the following quarters.
Nabeel Aziz: It's Nabeel Aziz from Rothschild & Co Redburn. The first one was just on your major Western semi cap customers have guided revenues '26 kind of up 20%. Your China semi cap, if you look at consensus, are up kind of 30% this year. Other than FX, is there any reason why VAT shouldn't deliver similar sorts of revenue growth in 2026 for semi valves?
U. Gantner: No, if they order, we are ready. No, I think that's certainly in line what we see. I think the configuration, as I mentioned before, it will be critical. Do they more legacy tools or they go in leading-edge tools. This will also then impact our sales growth.
Nabeel Aziz: Yes. Very clear. And then one of the topics that often comes up in our discussions is the topic of localization in China and specifically valve localization. So if there's a localization theme from the semi cap side, could you provide some more color in terms of what it is that's difficult to replicate about a VAT valve and what it is that makes your valves more resistant to disintermediation by a local supplier? Anything on that would be really helpful.
U. Gantner: Interesting questions. And of course, you can imagine we are discussing this topic quite a bit as well. I think, first of all, valves are still a niche. It's a niche product in an ecosystem. And as also mentioned, China they have to do a lot of development on their tools to bring that to the leading edge. And there are multiple components. And I think as long as they can, they rely on something that exists and works. It's proven in the market. Why you should do something in your bill of material, maybe valves are roughly in the 2%, right? Why you should focus now on valves, a critical component, but not changing your entire pump structure as long as you get the kind of the confidence that you get the products. So here, valves for such a tool, if you take the leading-edge tools, of course, my engineers don't like if I say that what it's like a screw for such a tool, right? It's not very critical in purity and ceiling and -- but still, they have other issues to solve than thinking about valves. And I think that's something that's very important. And then it's -- also I mentioned the semiconductor is a small industry still. People know each other and also here, very human being relationship is very important and supporting each other. Yes, you can replace anything if you want. But I think the strength of a company is always if something goes wrong, how to solve an issue. And there you can prove that you are the right partner. So coming from a supplier, we were clearly suppliers 20 years ago. And today, we are more partners in the industry. And losing a partner is something hurts, right? Replacing a supplier, you can do.
Michel Gerber: Okay. So maybe I take one more question from the room at the moment, [indiscernible] for you, and then we go to the questions that we receive over the phone.
Unknown Analyst: [indiscernible]. First one is on price increases. You mentioned that you had -- if I understood you correctly, you had preorders because you will increase your prices in Q1. I was just trying to understand, so you -- I guess you stick to your 2x wafer fab equipment growth that you can achieve. So how much -- so let's assume that's volumes. So how much would come on top in terms of pricing for 2026? I mean what's your idea or plan on price increases for 2026?
Fabian Chiozza: Maybe I can take that question. Look, I think the semiconductor industry is one of stable prices, not just the end product for the customers, it should remain affordable and economically viable. But I think we also learned how to ensure we work with our customer on this ever-increasing pressure of cost reductions. So we don't just adjust prices on a regular basis. Therefore, we have had, let's say, a pause on it. And after 2 years, we ran selective price increases that that's important. And we're certainly not exploiting the position that we have. So you can assume that those price increases have been placed in areas where, for instance, our margins suffered extremely under currency devaluations or also where we have not been able to get the required volumes in the past. So to quantify that, I said previously that the price increases are low to mid-single digit in percentage and the contribution of those are very low 2-digit million Swiss franc number. So it's definitely nothing that we will have to highlight on one of the slides when we would disaggregate volume from price in our growth.
Unknown Analyst: Okay. That's very clear. And a second one on the clean room space. I mean you read it obviously everywhere, yes, that there is an issue with clean room space, so basically fab space. I was just wondering what's your opinion on, let's say, the CHF 130 billion wafer fab equipment and next year, you showed on the graph, CHF 148 billion. I mean, at what point would you think it's becoming a real issue and actually stopping that accelerated growth in the next couple of years because still someone has to build those factories, yes?
U. Gantner: Well, here, I think the ones who invested ahead of the cycle, they are ready, right? They will win again. And I think that's typical in semiconductor. We have to invest ahead of the cycle to be and benefit. So we do it on our level as well with our factories in Romania and Malaysia. And the fabs are doing the same. The OEMs are doing the same. So they invest, they are ready. And some of the fabs, we see now that maybe they did not invest enough and more got surprised that their products, for example, DRAM is just ramping like hell at the moment, and they try to find fabs at the moment. So the issue for -- I think it's not a general issue, but for some companies, they might have an issue and might also then lose or they have to deprioritize the fabs to go to the leading edge. That's how they manage -- they have to manage that in the future. So certainly good that there is not enough clean room space. I think there is another element as well that every region and sometimes every country wants to get self-sufficiency. U.S. is doing a lot of -- because they want to have self-sufficient. China is doing -- the only country that is self-sufficient is Taiwan. Of course, they don't need a lot, but they have really the leading edge and also South Korea is very close to that. All the others are dependent on each other. So this is also a driver why they are building the fabs as well. And also even in Europe, there are some fabs, but maybe not fast enough.
Michel Gerber: Good. Thank you very much. So with that, I would turn over the Q&A to people on the phone. And operator, please, the first question.
Operator: The first question from the phone comes from Meihan Yang from Goldman Sachs.
Meihan Yang: [Technical Difficulty]
Michel Gerber: Can you please repeat the question? You were breaking up a bit here.
Meihan Yang: Yes, sure. [Technical Difficulty] basically your aluminum exposure.
Michel Gerber: Well, our exposure is to raw material and raw material price increases, I think you...
Fabian Chiozza: Yes. Okay. Yes. Thanks for that question. Look, we were already exposed to raw material inflation during the course of 2025. But thanks to our continuous improvement program, we could not only mitigate that effect, but also have had a positive net effect on our gross profit. And with these, let's say, measures being sustainable in our cost base, and we continue to deliver further improvements. I do not expect a negative impact from raw material swings during the course of the next 6 months, at least, as we also hedge our key commodity aluminum for about the annual volume that we expect. So the LME increases that we have seen, let's say, from $2,400 now to about $3,300, $3,200 will not directly impact our P&L. And hence, I'm pretty comfortable that we can sustain, if not slightly increase the gross profit margin that we have reported now for 2025.
Meihan Yang: On services margins. do you see your global [Technical Difficulty] and if you could remind us [Technical Difficulty] geographically?
U. Gantner: Well, I think service margin are always higher than what you do with an OEM. That's I think probably in every business like that. And I think we are on a very healthy level. And of course, as soon as also volume is kicking in, this will be getting even better. So the different -- on the different product lines, so consumables, spares, upgrades, retrofits. And certainly in consumables, it's -- normally, it's single parts, it's higher margin. And if it comes to upgrades, then it goes more into complete products like valves. And of course, there is margin then lower than in single parts as this is just normal probably also here in different businesses.
Fabian Chiozza: Yes. And maybe just to quantify that a little bit. So we have seen a nice increase of the EBITDA of our service business in the second half to about 47.6%. And this was mainly driven by the increased absorption of the cost structure. So with the strong increase in order intake, I would also see that level to sustain well into 2026. And on the margins, again, we have for spares and repairs, we have definitely the highest margins together with the upgrade and retrofits. And then on some of the consumables, as Urs has already said, it is slightly lower. But overall, the service business will definitely return as a very accretive driver to our bottom line margin in 2026.
Operator: Next question comes from Oliver Wong from Bank of America.
Oliver Wong: My first question is on China growth. So I think you guys [indiscernible] mid-single digits, and you're expecting [indiscernible] I was just wondering given your mix more important to domestic semi cap, which as we mentioned, some of them grow [indiscernible] Could that be potential upside that may grow more than the market?
U. Gantner: Yes, certainly. As mentioned, maybe total wafer fab equipment spend in China will be flat, maybe single digit up. And as mentioned as well, the domestic wafer fab equipment tool manufacturers they will grow to increase the self-sufficiency rate. But also here, it's -- visibility is not that clear because they also have to go through the qualification. So their tools need also to go to the level that the next node can be produced. Once it is qualified in China, it can be -- go extremely fast. So you always have to be ready in China to deliver yesterday and not tomorrow. So -- but first, they need, of course, to qualify the tools as well. I expect that the China business will certainly grow for VAT this year in the region of -- as the OEMs will grow as well in the 20%.
Oliver Wong: And my third question is on [indiscernible] what should be expect progressively higher orders especially [Technical Difficulty] kind of how you see the revenue, any kind of impact upon the preordering for that [Technical Difficulty] rest of the year?
U. Gantner: I think the preordering in the end, if you look at the whole year will be not that material. So it will be quite almost noise. I expect that the order pattern will grow what we see at the moment, what's going on in the market that is more and more clarity coming on the fabs going online. So I expect that the order cadence will grow. There could be kind of, let's say, shocks out there. If there is somewhere a shortage, then suddenly customers start ordering more without the business impact. So similar behavior as during the chip shortages, right? They just started to order full year. And then it can, of course, be not a cadence. It can be a peak and then maybe go back. So the behavior is hard to say. At the moment, I think the communication is quite open through all the supply chain. I don't expect it at the moment, but something like a shortage somewhere kind of trigger something like that.
Operator: The next question comes from Jörn Iffert from UBS.
Joern Iffert: I will take them one by one. [indiscernible] the first one is the outlook [indiscernible] is there any anything you're seeing [indiscernible] for example others, which is a [indiscernible] first question, please.
U. Gantner: Well, you're now focusing on one segment in the wafer fab equipment, particularly the lithography. I think there, the EUV, if you see the numbers, is up at least 2x this year. So -- but in general, of course, still lithography is a smaller business for VAT overall. The biggest business is always going to the deposition and etch application. But EUV certainly is also growing this year, what we heard from the customer side, and that's a very interesting growth business for us as well.
Joern Iffert: Okay. So just to clarify [Technical Difficulty] This was more or less...
U. Gantner: Yes, you say correctly up to 2x. So there is some room. Yes, there's no reason. Now if the investments are coming, especially in the leading edge fabs, we are on track. And if all these major OEMs equip the fabs where we are specified where we had a spec win in the past, then, of course, we are on that track.
Joern Iffert: And then the second question [indiscernible] on the CMD in May, you had this CHF 1.6 billion revenue target for '27 [indiscernible] CapEx. Now I see in your slide that you mentioned CHF 135 billion, I assume it's a typo or has something changed here? And then after this one, maybe a follow-up to this related, please.
U. Gantner: No, you see that at the moment, it's a very dynamic market. I also showed that some already displayed that it's CHF 180 billion wafer fab equipment. In the end, it's all about what can the industry digest in the end? Is there enough shelves there? Do they really understand what technology they need is also the chip manufacturers already ready to do high volume or are there process issues? This is still in floating. It's not just that like in automotive, you have a new car, you build a factory and you want to produce 100,000 cars a year. And this is planned and they will achieve probably plus/minus 1%. Here, I try to show you it's an atomic layer, atomic level what they have to do. They have to drill these fancy structures. Sometimes they don't know yet how they want to -- they can do that. The guys in [ IMEC ] they did it. They know it works, but now they have to bring it to high volume with a certain yield on a wafer as well. And I think that's the big challenge the industry has. And that's why, yes, the forecast looks brilliant, but there are a lot of technical challenges as well. And that's why this wafer fab equipment can, of course, also you see that a little bit shift or pull in or push out. So that's always critical. So overall, under these circumstances, yes, we're still confident that we can achieve this CHF 1.6 billion with all the FX and headwinds that come, but it's certainly a good reference for you what you want to achieve by then.
Joern Iffert: Okay. [indiscernible] revenue on an underlying CapEx of CHF 125 million. And now in the earnings slides, I see that this is now based on the equipment CapEx of CHF 135 million. My question was really, is it a typo or has something changed regarding the correlation here.
U. Gantner: I don't have it at the moment in the mind, so maybe we can do that offline with Fabian.
Fabian Chiozza: No, Jorn, I can take that. It's not a typo and your house was actually pretty bullish on the WFE number. So you certainly also indirectly drove that up. And I think ultimately, the answer lies in what Urs was explaining that, yes, of course, we also observed these numbers. At times, we're also surprised of the volatility and the dynamic that the researchers bring into the WFE development. And at the end of the day, there are 2 thoughts I just want to give you. The first one is we always have to remember that we are a Swiss franc reporter and WFE numbers are in U.S. dollars. So was the reference at the Capital Markets Day, which was at -- I think it was CHF 0.835 at the time. And secondly, also mentioned by Urs, I think we need to see how the phasing of these investments is ultimately happening and how the supply chain is digesting this massive amount of CapEx into industrialization of tools. So I think overall, we are ready. We are cranking up the machine. And if investments are going to develop into the heights that are stipulated right now by market observers, then obviously, VAT's revenue will also develop accordingly.
Michel Gerber: Okay. So we just heard that there was a bit of an echo on the questions. But now maybe next question, please operator.
Unknown Analyst: I would like to ask on China again [Technical Difficulty] probably still close to 50% exposure there. Then I recall you said China is the highest margin market for individual valves. If you now expect the market to grow China by 0% to maybe 5%, but you expect the Western market to grow maybe 15% to get to this 11% market growth, would that mean a negative mix effect for you? And can you maybe a little bit elaborate on the impact here. That would be my first question.
Fabian Chiozza: Yes, we have stated before that the China business certainly has a higher margin profile than our long-standing huge Western customers. But as you can imagine, China has grown quite a bit over the years. And also these guys have to work on cost-down initiatives. They have to ensure that the yield gets into an economically viable pattern. And therefore, these margins will also adjust over time. Now talking about 2026, I do not expect a material negative mix effect on the bottom line. As I have stipulated before, we expect very good contributions from our service business. We are ramping significantly the output of Malaysia, which will also help. We are also continuing to ramp the new factory in Romania. And then also on the personnel cost side to soften the impact from the Swiss franc. We established a new legal unit in Malaysia, and we're now also starting to provide shared services out of Malaysia. So all of that together will help to still provide an increased margin profile and make us even more resilient as we move forward.
Unknown Analyst: Understood. Second question on operating leverage. You mentioned that [Technical Difficulty] at the same time I would assume that VAT is mostly an assembly company. So if you want to raise output, you want to raise volume, you raise staff -- safety staff, which gives you a relatively small operating leverage. But I would assume that you have certain staff quantities in place as of today that allow you to ramp to a certain extent without adding people. Could you maybe give us a little bit of an idea how -- where the utilization rate is at the moment, which then allows us to calculate incremental volume without adding too much new people, if that makes sense.
Fabian Chiozza: Yes. Look, we are running our operations always with 2 mindsets. There's also the vigorous debates I have with my COO colleagues. On the one hand side, obviously, we have the cost discipline. On the other hand, we have the scalability, the ramp capability. Now fortunately, we have developed over the years a model that really allows us to timely adjust capacities, both down, but then also up. We talked at the end of summer last year that we have taken out in Switzerland about 110, 115 people. And you can imagine that some weeks ago, we started to bring them back on board, and this is continuing. So therefore, the personnel cost effects are pretty well synced also with the increase in factory output, which then translates into revenue. And therefore, the biggest lever for me is really the measures that I have just discussed a moment ago in combination with a much higher fixed cost absorption. Remember, we have about 30% of our costs are fixed. So any additional franc of revenue will substantially help to bring more bottom line profit. With regards to the utilization rates, we are in Switzerland, still in the low 60s. That is now cranking up. And in Malaysia, in the existing factory, we're operating around 90% right now. And as I said before, the second factory is basically ready. It is right now working as an internal machining supplier. And once we see now demand unfolding, we will bring in the clean rooms and then also switch this factory on for end product production.
Michel Gerber: Now maybe one question from the webcast still. I'd like to ask you, Fabian. And it's more a little bit of a clarification to a statement you made earlier. and it has to do with the 2026 EBITDA margin expectation range or whatever. And the question is whether you said the top half of the 30% to 37% corridor or what kind of like statement. It was a little bit misleading.
Fabian Chiozza: Yes. No, I said that I want to move back in the upper end of the first half of that band. So the first half being 30% to 33.5%, I hope that clarifies it.
Michel Gerber: Okay. Thank you very much. So as they say, time flies when you're having fun. We're already past the hour. We don't have any more questions neither from the webcast nor over the phone. And I think for the guys who we likely -- we'd like to invite you now to a quick standing lunch. It's one floor down. And there will be, again, opportunity for additional questions unless you have one burning one that you want to express now to be heard over the air. So otherwise, I would like to thank you, Fabian and Urs for today. Thank you for coming. And next results will be on the 16th of April, our Q1 trading update. And we're confident that we can show you the nice book-to-bill ratio that we alluded to today. So thank you very much, and see you later with drinks and something to eat.