Ladies and gentlemen,
welcome
to
the
Comet's
Full
Year
2021
Results
Conference
Call
and
Live
Webcast.
I
am
Arianna
the
Chorus
Call
operator.
I
would
like
to
remind
you
that
all
participants
will
be
in
listen-only
mode
and
the
conference
is
being
recorded.
The
presentation
will
be
followed
by
a
Q&A
session.
[Operator Instructions]
The
conference
must
not
be
recorded
for
publication
or
broadcast.
At
this
time,
it's
my
pleasure
to
hand
over
to
Ulrich
Steiner,
VP
Investor
Relations,
Comet
Group.
You
will
now
be
joined
into
the
conference
room.
[audio gap]
U
Ulrich Bernhard Steiner
(00:00:50-00:00:55) on
the
phone.
Thank
you
very
much
for
joining
Comet's
full
year
presentation
for
the
year
2021.
In
the
following
minutes,
Our
CEO,
Kevin
Crofton;
and
our
CFO,
Lisa
Pataki
will
present
you
the
results
of
the
last
year.
After
the
presentation,
you
will
have
ample
time
to
ask
questions
either
here
in
the
room,
but
also
over
the
phone,
so
we'll
open
the
line
after
that.
The
documents
we
published
today
are
available
on
our
website
since
this
morning.
You
can
also
find
the
annual
report
with
much
more
information
on
our
figures
on
the
website.
Before
we
start
the
presentation,
I
would
again
like
to
remind
you
of
our
disclaimer.
We
will
make
forward
looking
statements
today,
and
as
you
know,
there
are
always
uncertainties
linked
to
those
forecasts.
With
that,
I
would
like
to
hand
over
to
our
CEO,
Kevin,
please.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Thank
you,
Uli.
Very
much
appreciated.
Great.
Good
morning,
everybody.
It's
super
to
see
some
folks
live,
all
in
3D,
which
is
awesome.
I
think
it's
the
first
one
that
I've
been
able
to
have
as
CEO
of
Comet.
So,
that's
fantastic.
And
also,
of
course,
as
Ulrich
just
said,
welcome
to
all
of
you.
Thanks
for
being
intrepid
in
making
the
trip.
And
for
those
of
you
on
the
phone,
thanks
for
joining. I
understand
there are
a
few
people
that
actually
were
supposed
to
be
here
live
that
couldn't
be
here
because,
okay,
they've
got
COVID.
So,
thanks
for
not
coming.
And
I
hope
that
you
all
get
a
good
recovery.
So,
this
is
going
to
be
hopefully
an
animated
and
a
rich
discussion.
Hopefully,
you
all
enjoy
it.
And
as
Uli
mentioned,
we
will
take
a
break
at
the
end
for
a
Q&A.
So,
I'll
be
glad
to
answer
any
questions
you
might
have.
So,
I'm
going to
talk about
what's
happened
sort
of
at
a
high
level
for
2021.
I'll
talk
about what's
happened
in
the
industry
in
2021,
and
then
I'll
talk later
on
when
we
get
to
the
outlook
session
about
what
we
see
for
2022
and
a
bit
beyond
that
as
well.
So,
with
that,
I'm
just
going
to
march
right
into
it.
First of
all,
before
you've
seen
the
results
already.
They
are,
in
my
view,
they're
excellent.
And
this
is
a
result
of
really
hard
work
from
our
employees.
We
owe
them
a
gratitude
of
thanks,
but
also
the
trust
that
our
customers
have
given
us.
They
are
absolutely
embedded
with
us,
and
it's
a
privilege
to
have
them
as
our
customers.
And,
of
course,
you
all
that
follow
us,
we
appreciate
your
support
as
well.
So,
thank
you
to
you
from
the
Comet
team
for
the
results.
You've
helped
us
get
there
and
we
greatly
appreciate
that.
Now,
relative
to
the
results,
we've
already
said
it
out
loud
in a
couple of
different
ways.
It
is
a
record
year
for
the
company.
Lisa
is
going
to
go
through
the
actual
results
in
detail,
I'm
not, but
what
I
do
want to
stress
is
that
we've
had
really
very
nice
revenue
growth
nearly
30%
year-over-year
revenue
growth.
It's
[ph]
hashy
(00:04:15), depending
upon
the
division
we're
talking
about,
and
I'll
talk
about
that
in
a
few
minutes.
And
of
course,
our
EBITDA
margin
has
actually
reached
a
threshold
point.
It's
a
hurdle
point
for
the
company
to
be
at
20%
EBITDA.
And
when
you
run
the
numbers,
you
can
do
the
math
yourself.
It
shows
you
that
we
did
a
very,
very
nice
job
in
the
second
half
of
2021
to
get
to
this
level
of
performance.
So
I'm
quite
pleased
with
the
results
as
a
company
and
as
an
organization.
So
record
results
for
the
company
really,
really
positive
for
us.
And
I
would
have
to
say
that
most
of
that
comes
from
staying
absolutely
relentlessly
focus
on
our
strategy,
and
I'll
use
that
term
relentless.
We
are
making
sure
that
we
stay
true
to
the
core
of
the
company,
stay
focus
on
our
sort
of
markets,
particularly
in the
semi
and
electronics
space,
but
also
make
sure
that
we
serve
the
aerospace,
the
automotive
and
the
security
space
as
well,
and
I'll
talk
to
that.
In
the
middle of
this
page,
we
talk
about
the
continued
progress
towards
our
midterm
targets.
To
remind
you
our
midterm
targets
2025,
we
said
that
we
would
have demonstrated
at
least
15%
CAGR
year-over-year
through
the
period.
We
said
that
we
have
reached
25%
EBITDA.
And
we've
said
that
we
would
reach
at
least
30%
ROCE. That's
what
we
said
we're
going
to
do.
And
I
can
say,
we're
quite
strongly
focused
on
that
and
we're
well
on
the
way
to
that
path.
We
announced
that
in
2019,
we're
two
years
into
that,
in
that
six-year
horizon,
and
quite
comfortable
with
where
we
sit.
So
in
the
middle
of that
page, and
quite comfortable
with where
we sit.
So, in
the middle
of
that
page, progress
towards
our
midterm
targets,
we're
absolutely
focused
on
getting
our
new
products
out.
We
launched
new
products
in
2020
that
are
bearing
fruit
in
2001,
and
as
a
result,
we
know,
without
exception,
we've
taken
market
share
in
2021.
And
so,
I'm
quite
pleased
that
what
we've
done
at
PCT,
what
we've
done
in
the
X-ray
systems
division
as
well
as
in
the
X-ray
modules
division
that
we've
taken
share
primarily
because
of
new
products
that
we've
launched
into
this
space.
And
I'll
talk
about
that
in
a
few
minutes
as
well.
We
also –
overall,
I
would
say
that
we've
really
focused
on
how
we
are
positioned
in
Asia.
And
as
you
know,
most
of
you
know,
we
started
our
mass
production
facility
dedicated
to
high volume
manufacturing
in
Penang
nearly
two
years
ago.
We
said
we
would
fill
that
factory
to
20%
by
the
end
of
2021,
and,
in
fact,
that
actually
happened.
So,
we're
on
track
to
delivering
what
we
said
we
would
do
from
the
Penang
facility,
and
then also,
for
those
of you
all
that
stuck
with
us,
we
also
announced
that
we
had
established
a,
I
would
say,
boots
on
the
ground
in
Taiwan,
direct
sale,
direct
service
in
Taiwan,
which
is
the
most
important
region
in
the
semiconductor
industry.
And
so,
we
have
boots
on
the
ground,
direct
sales,
direct
service,
and
it's
focused
on
really
the
top
foundries
as
well
as
the
top
OSATs,
O-S-A-Ts.
Those
are
the
outsource
assembly
and
test
companies
like
ASC
and
EMCOR
and
PTI.
We've
improved
our
overall
production
and
our
overall
efficiency.
We've
nearly
doubled –
sorry –
we've
grown
our
efficiency
on
employee
basis
by
nearly
50%
year-over-year.
That's
going
to
continue.
We're
not
world
class,
that's
quite
clear,
but
we
are
going
to
get
reasonably
good
performance
there.
And
if
I
look
at
the
challenges
aspect
of
this,
we're
all
kind
of
tired
of
the
pandemic,
but
it
was
absolutely
imperative
that
we
focus
on
what's
happening
with
our
team,
making
sure
that
our
workplaces
are
helpful
workplace,
but
also
that
we're
protecting
our
customers
as
well.
And
I
can
say,
we've
managed
the
COVID
pandemic
environment
that
still
exist
in
a
reasonably
good
way.
And
then
as
everybody
knows,
supply
chain,
supply
chain,
supply
chain,
that's
the
theme
of
everything
we
talk
about
today.
It
starts
off
as
chips,
but
it's
something
now
that
affects
the
entire
industry
whether
it's
electronics,
PCB
boards,
but
also
cables,
wood
for
crates.
I
mean
things
that
we
as
a
society
we
would
think,
that
must
not
be
that
bigger
deal
maybe,
but it
is
a
challenge.
And
as
I've
said
in
many
different
forums,
we've
managed
this
challenge
really,
really
day-to-day.
And
the
supply
chain
team
has done
an
incredibly
good
job
getting
there.
And
as
a
result,
we've
been
able
to
support
our
customers
and
meet
the demands
that
they
have.
So,
I'm
quite
pleased
with
the
overall
performance
there.
Now,
I
have
to
do
say,
yes,
our
results –
our
result
of
improving
end
market
conditions
in
every
market
we
serve,
different
flavors
of
how
would
that
improvement
looks
like.
Of
course,
the
semi
industry
is
in
a
boom
cycle
still,
and
I
remember
people
challenged
me
on
the
use
of
the
term
super
cycle
a
couple
of
years
ago,
and
I
hope
that
I've
convinced
everybody
to be
super
believers
at
this
point.
The
industry
grew
somewhere
around
34%.
I've
seen
some
folks
say
it
might
be
as
high
as
4-0,
40%
year-over-year,
2020
to
2021.
But
I
can
say
for
sure
that
that's
going
to
continue.
So
that
gives
you
a
taste
of
what
our
outlook
looks
like
as
well.
So
that
cycle
is
fully
in
play.
I
would also
say
that
in
the
automotive
space,
production
is
definitely
improving.
It's
lumpy.
It's
really,
really
a
shallow
recovery,
but
we
foretold
that
going
into
the
year.
It's
single-digit
growth
at
the
moment.
It's
going
to
be
high
single-digit
growth
quite
soon.
But
on
the
other
hand,
what
we
do
see
is
this
whole
uptick
of
the
EV,
electric
vehicle
programs.
And
so
by
2025,
we're
going to
see
that
EV is
going
to be
more
than
50%
of
all
cars,
light
vehicles,
et
cetera,
that are going to
be
produced.
And
why
that's
important
is
that
drives,
in
particular,
our
X-ray
businesses.
Of
course,
the
PCT
business
will
benefit
from
that
growth
as
well,
but
it
really
is
a
key
factor
in
the
IXM
and
IXS
businesses.
Maybe
third
to
– third
over
on
this
slide,
it
shows
a
cooled
jet
engine.
Remember,
I'm
an
aerospace
engineer,
so
I
really
like
this.
But,
the
global
passenger
air
travel
is
increasing,
particularly
in
North
America.
It
continues
to
recover,
we
can
see
the
industry
is
shrugging
off
the
pandemic.
It's
a
little
bit
lumpier
in
China,
but
the
rest
of
Asia
looks
to
be
quite
strong.
And
as
a
result,
again,
the
IXS
and
IXM
businesses
will
be
able
to take
advantage
of
that
growth
as
well.
And
on
the security
side,
that
goes
hand-in-hand
with
the
growth
in
passenger
air
miles,
but
also,
of
course,
in
the
defense
sectors
as
well.
So
the
four primary
markets
really,
really strong
growth
in 2021
for
the
semiconductor
space,
single-digit
to
high-single-digit
growth
for
the
remaining
three
industries
that
you
see
there.
So
maybe
some
comments
about
what
we're
trying
to
do
from
the
fabric
of
a
company
perspective.
I
guess
the
first
thing
I
would
say
and
I've
kind
of
covered
it
a
little
bit
ago
is
our
productivity.
It's
raised.
It's
increased
by
almost
50%
year-over-year.
We
are
running
around
CHF 67,000
EBITDA
per
employee.
We
expect
that
to
grow
obviously
by
2022
and
that's
up
50%
from
the
previous
year.
We
also
can
say
that
our
gross
margins
have
improved
significantly.
You've
seen
that
from
our
financial
results.
It's
greater
than
300 basis
points,
and
I
think Lisa
is
going
to –
I
know
Lisa
will
talk
to
those
details
because
we've
just
given
big
numbers
here.
So
as
a
result
of
that,
that's
from
high –
of
course,
high
volume,
but
also
our
product
mix
is
also
improving
in
all
sectors
of
the
business.
And
it's
a
varying
degrees
of
how
fast
we
can
make
that
change,
for
example,
IXS.
Those
products
are
ordered
a
year
to
a
year
and a
half
in
advance.
So
we're
still
flushing
those
previous
orders
through
our
system.
But
I'll
talk
about
the
transformation
of
that
business
further
in
just
a
few
minutes.
In
the
center
there,
where
we
say
we
strengthened
our
proximity
to
our
customers,
I
mentioned
that
already,
but
maybe
to give
you
the
flavor
for
that.
Currently,
now
our
penetration
into
the
Asian
market
stands
at
about
40%
of
our
total
revenue,
and
that's
up
from
about
30%
a
year
prior.
So
that's
roughly
a
60%
growth
year-over-year.
We've
also
improved
our
footprint.
It
says
here
rapid
growth
in
Taiwan
and
China.
I
already
mentioned
the
boots
on
the
ground
in
Taiwan,
direct
sales
and
service
in
the
Taiwanese
market.
Of
course,
we're
booming
in
China,
that's
a
significant
growth
year-over-year.
But
also
we
do
have
our
Korean
R&D
center
which
concentrates
on
matchbox
assemblies
for
everybody
else
but
the
Tier
1s,
and
we
can
explore
that
later
on
as
well.
Now,
in
the
product
and
services,
I'll
get
to
some
specifics
when I
talk
about
the
actual
divisions,
but
maybe
the
most
important
is
that
we
are
well
on
the
path
to
changing
the
focus
of
IXS
and
IXM
to
be
focused
on
the
semi
space,
the
electronic
space,
and
even
the
battery
space.
And
the
reason
for
that
is
because
these
tend
to
be
higher
margin,
higher
volume
business
sectors
than
the
traditional
aerospace,
automotive,
and
security
sectors.
So,
that
student
body
shift
is
occurring
and
we're
on
that
path,
and
I'll
talk
about
some
of
the
products
that
we
launched
there
in
just
a
few
minutes.
And
then, on
the
far
right
of
this
page
is
really
our
investment
in
our
company,
and
we're
keenly
focused
on
investing
in
our
team.
We
kicked
off
a
comprehensive
talent
identification
and
management
program
during
the
year,
really
to
understand
our
high
potential
talents
and
also,
who
we
can
grow
with
within
the
company.
We've
sharpened
our
values.
And
if
I'll
remind
you,
our
values
really
are
to
be
absolutely dead nuts
focus
on
our
customers,
so
customer-centricity
is
number
one.
Number
two,
we
want
to
challenge
and
empower
our
team
members.
We
want
them
to
make
decisions
at
risk.
And
do
that
with
an
open
mind
and
a
willingness.
And
then
also
to
have
this
whole
trustful
collaboration,
[ph]
this
idea (00:15:51)
that
we
trust
each
other,
that
we
are
making
good
decisions,
we
will
work
together.
And
it's
a
way
for
us
to
make
sure
that
it's
a
team
effort
of
making
things
happen.
And
we
did
publish
our
first
full
compliant
GRI
report
for
ESG
purposes.
You'll
see
that
in
the
annual
report,
if
you
haven't
seen
it
already,
it's
a
comprehensive
report.
Remember,
we
were
sort
of
ad
hoc
on
this
in
previous
years.
Now,
we've
got
a
well-documented
situation
report,
and
it's
something
for
us
now
to
build
upon.
And
we'll
announce
what
those
metrics
and
goals
are
for
the
company
in
about
middle
of
the
year
or
slightly
thereafter.
Now,
a
few
comments
about
our
divisional
performance,
and
again,
I'd
say
it's
quite
good.
Each
one
of
these
divisions
have
grown
to
the
point
where
our
company
has
grown
on
the
order
of
30%
as
a
group,
but
each
one
of
these
divisions
were
at
the
30 percentile
or
higher
in
and
of
themselves.
PCT,
of
course,
was
higher,
it
grew
at
about
36%
year-over-year,
which
is
outpacing
the
market
conditions
and
outpacing
our
peer
competitors.
Now
IXS
and
IXM
both
grew
at
almost
exactly
30%.
And
I
would
draw
your
attention
to
the
first
bullet –
sub-bullet
on
the
left
here.
For
those
of
that
have
been
waiting
with
bated
breath
about
when
are
we
going
to announce
that
we
finally
got
a
generator
in
the
marketplace,
we
have
sold
our
first
Synertia
product,
we
used
to
call
that
[ph]
DaVinci (00:17:33),
so
this
is
the
first
RF
generator
in
our
new
generator
family.
We
have
launched
that.
We
have
received
our
first
purchase
order.
Now,
I
have
to
admit
that
I'm
shading
it
a
little
bit.
And
the
reason
why
I say
that
is
because
actual
PO
occurred
in
the
second
week
of
January.
So,
just
to
be
clear,
it
happened
in
January
not
in
December.
So,
I
should
be
fully
transparent
on
that.
But
I
think
it's
important
that
everybody
understand
that
yes
we're
in
the
marketplace.
Yes,
the
generator
has
been
sold.
And
I'm
sure
you're
going to
ask
me
questions
about
that
later.
So,
I'll
just
leave
it
at
that.
We
did
expand
our
market
share
in –
particularly
in
the
RF
matchbox
sector.
We
took
16
new
design
wins
during
the
course
of
the
year.
The
bulk
of
those
design
wins
more
than
half
were
Tier
1
level
customers.
And
also
I
would
say
that
nearly
20%
of
those
also
occurred
with
customers
in
China.
So,
good
regional
distribution,
good
Tier
1
and
Tier
2
distribution.
And
the
reason
why
this
is
most
important
is
because
that
then
bears
fruit
about
a
year
from
now.
And
I'll
remind
you,
last
year
we
took
23
design
wins.
And
as
a
result,
we
do
expect
because
of
PCT's
performance
and
because
of
those
design
wins
that
we
are
comfortable
that
we
will
be
able
to
say
in
April
that
we
have
taken
market
share
in
the
RF
match
space
again
this
year.
Last
year,
we
were
at
36%
market
share
at
number
one.
We
should
have
advanced
that
as
well.
And
I
already
mentioned
the
product
transfer.
On
IXS, we
use
that
terminology
realignment.
It's
a
euphemism
for
saying
that
we
have
really
redesigned
that
business.
This
is
a
work
in
progress.
I'll
remind
you,
I
said
that
we
were
starting
this
whole
activity
about
a
year
and
a
half
ago.
That
realignment
gained
momentum.
We
reduced
the
number
of products
that
we
sell
out
of
that
organization.
We
start
doing
custom
business.
Remember
we
are
doing
a
lot
of
one-offs,
single-off
business
items
which
you
would
sell
one-off,
maybe
two
or
three
years
later,
you'd
sell
another
one,
and
that's
a
very
difficult
set
of
business
circumstances
to
be
profitable.
So,
we've
really
moved
away
from
that
type
of
business
line,
and
we
have
been
extremely
focused
on
high
quality,
high
revenue,
high
margin
business
in
that
organization.
And
I
would
draw
your
attention
to
the
second
bullet
there
in
a
minute.
We
have
received
our
first
hard
copy
purchase
order
for
a
system
that
is
being
used
for
inspecting
advanced
package
devices. This
is
with
the
world's
largest
foundry.
That's
a
major
win
for
us,
and
it
shows
that
we
can
be
in
that
space
successfully,
and
that
we
can
probably
generate
some
delight
with
our
customers.
And
then
on
the
far
right
here,
you
see
IXM,
the
module –
the
industrial
X-ray
module
business.
That
team
has
done
a
really,
really
good
job
in
introducing
new
products
alongside
a
recovery
in
their
traditional
served
markets.
So,
we've
released
the
MesoFocus focused
product
lines
into
the
electric
vehicle
space,
batteries,
electronics,
but
also
in
the
semi
space.
In
addition,
though,
we've
been
able
to
take
more
share
with
the
Ion
product
as
well
particularly
in
the
security
space.
So,
this
whole
inroad
is
happening,
and
I
can
say
that
the
team
is
definitely
taking
market
share.
Okay.
This
is
my
last
slide
before
I
hand it
over
to
Lisa
and
I
would
just
hope
you'll
agree
with
me
as
well.
I
think
it's
been
a
very
good
year.
We're
two
years
into
this
six
year
program.
Our
strategy
is
definitely
bearing
fruit.
We're
staying
focused
on
it.
We
are
and
have
been
demonstrating
at
least
a
15%
growth
year-over-year.
We're
well
on
track
to
be
at
about CHF
830
million
or
more
by
2025,
we've
demonstrated
really
good
progress
on
the
EBITDA
performance.
We
should
be
comfortably
at
that
25%
EBITDA
range.
And
we've
done
– we're
very
close
to
the
30%
ROCE.
And
really,
the
themes
are
basically
this,
PCT,
the
process
control
technology
group,
the
RF
business,
just
needs
to
keep
doing
what
they're
doing,
they
need
to
keep
getting
the
design
wins.
We
need
to
expand
capacity
continuously
through
this
period,
so
that
we
can
stay
ahead
of
the
curve
in
semi.
The
X-ray
businesses
will
continue
the
redesign
and
the
transformation
of
IXS,
but
also
start
to
capitalize
more and
more
on
the
trend
in
IXM.
And
for
sure,
we
want
to
make
sure
that
we
have a
really
nice
and
successful
collaboration
with
all
of
our
partners,
our
customers,
first
and
foremost,
our
supply
chain,
which
probably
are
getting
tired
of
hearing
from
all
of
us
at
times,
but
I
think
if we
work
together,
we'll
definitely
overcome
challenges.
And
for
sure,
I
have
to
say
again,
thanks
to
our
employees,
because
they've
been
incredibly
dedicated
to
our
success.
And
with
that,
I'm
going
to hand
it
over
to Lisa
and
see
if
you
can
make
your
way
over.
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
Thank you.
Okay.
Perfect.
All
right.
Thank
you,
Kevin,
and
good
morning
to
everybody,
it's
really
nice
to
see
you
all
here
in-person.
And
for
those
of
you
on
the webcast,
a
very
warm
welcome
to
you
as
well.
I
will
go
through
the
prepared
remarks
here
a
little
bit
more
formally
and
then
looking
forward
to your
questions
afterwards.
In
2021,
Comet
achieved
outstanding
record
high
financial
results
in
top
line
growth,
profitability,
returns,
and
generation
of
free
cash
flow.
As
Kevin
mentioned,
these
achievements
resulted
from
our
commitment
to
maintain
our
focus,
gain
market
share,
produce
efficiently,
and
by
proactively
managing
supply
chain
and
COVID-related
challenges.
Our
strong
performance
has
enabled
us
to
return
more
to
shareholders
to
an
annual
dividend
and
to
fund
the
investments
fueling
our
growth
strategy.
Now,
turning
to
the
actual
results
of
2021,
the
company
achieved
sales
of
CHF 513.7
million,
an
increase
of
29.8%
compared
to
2020
which
was
also
a
historic
year
for
Comet.
Sales
volumes
increased
in
each
of
our
end
markets
and
divisions.
Our
core
markets
in
North
America
rose
17%
compared
to
the
same
period
last
year
and
account
for
42%
of
the
group's
total
sales.
Since
2020,
we
expanded
our
geographic
footprint
with
a
new
production
facility
in
Penang,
Malaysia;
new
subsidiary
in
Taiwan;
expansion
of
our
sales
and
customer
services
in
Japan;
and
in
our
R&D
and
demo
center
in
Korea.
Our
ability
to
be
closer
to
our
customers
resulted
in
60%
sales
growth
in
Asia.
Asia
now
represents
about
41%
of
group
sales,
compared
to
33%
in
2020.
Gross
margins improved by 360 basis
points compared to 2020. Each division
achieved
double-digit
growth in
volumes with a favorable
product
mix.
This
was really
our
primary
lever
in
driving
gross
margins
for
the
year
2021.
Additionally,
faster
and
optimized
production
processes
led
to
improved
operational
leverage
that
helped
offset
higher
input
costs
coming
from
labor,
raw
materials,
components
and
logistics.
Going
into
2022,
production
efficiencies
and
product
mix
will
further
compensate
for
rising
costs.
Operating
expenses
in
2021
were
higher
than
in
the
same
period
last
year
due
to
investments
in
growing
the
company.
We
invested
in
people
to
manage
growth
in
all
areas,
including
operational
excellence,
supply
chain,
sales
and
marketing,
and,
of
course,
in
research
and
development.
Our
R&D
represents
roughly
11%
of
sales
and
remains
the
foundational
focus
for
the
group
with
investments
focused
on
medium
and
long-term
strategic
projects,
mainly
targeting
the
semi
and
electronics
markets.
It
should
be
noted
that
net
operating
expenses,
excluding
the
2020
gain
from
the
sale
of
the
ebeam
business,
as
a
percentage
of
revenue,
decreased
from
30.9%
in
2020
to
27%
in
2021.
We
achieved profitability
at
the
upper
end
of
our
guided
range
as
a
result
of
higher
sales
volumes,
product
mix,
and
operational
efficiencies.
We
improved
EBITDA
from
CHF 58.6
million
in
2020
to
CHF 102.7
million
in
2021.
This
represents
520
basis
points
improvement
to
20%
EBITDA
margin
compared
to
14.8%
at
the
same
time
last
year.
Our
performance
grew
margins
by
590
basis
points,
more
than
compensating
for
70
basis
points
of
margin
erosion
due
to weaker
foreign
exchange
conversions
and
the
elimination
of
the
2020
one-time
gain
from
the
sale
of ebeam.
The
effective
tax
rate
for
2021
was
18%,
driven
by
the
taxable
profit
mix
generated
from
our
international
subsidiaries. We
will
continue
to
monitor
the
potential
local
tax
changes
of
our
subsidiaries,
especially
as
it
relates
to
corporate
income
tax
in
the United
States
and
with
new
changes
in
the
OECD.
As
a
result
of
our
solid
operating
results,
Comet
achieved
a
net
income
of
CHF
67.4
million,
representing
a
net
income
margin
of
13.1%
and
a
return
on
capital
employed
of
26.8%.
Now,
let's
turn to
the
division
results
for
2021.
Our
focus
on
delivering
to
our
customers
operational
efficiencies
and
culture
paid
off.
Each
of
our
divisions
achieved
double-digit
sales
growth
while
expanding
profitability.
The
Plasma
Control
Technologies
division,
PCT
achieved
record
performance
in
sales
and
profitability,
executing
remarkably
against
the
backdrop
of
a
booming
semiconductor
industry.
Sales
increased
36.2%
from
CHF 224.7
million
in
2020
to CHF
306.1
million
in
2021.
PCT
achieved
sales
growth
across
key
geographic
markets
and
with
all
major
customers.
In
2021,
PCT
benefited
from
the
start
of
its
production
in
Penang,
Malaysia,
was
reached
20%
capacity
by
year-end
2021
and
further
cost
discipline
in
operations.
These
factors,
in
addition
to
the
strong
volume,
expanded
EBITDA
margin
by
430
basis
points
versus
2020
to
achieve
high
26.3%
margins.
Division
results
for
the
two
X-ray
divisions
reflect
the
focused
strategy
and
the
improving
market
conditions.
Let's
start
with
X-Ray
Systems
business,
IXS.
IXS
achieved
important
milestones
in
its
focused
realignment
strategy.
IXS
sales
growth
was
complemented
by
competitive
wins,
with
newly
introduced
X-ray
systems
pointed
towards
the
higher
growth,
higher
margin
semiconductor
and
electronics
industry.
The
division
contributed
CHF 138.9
million
in
sales,
an
improvement
of
30.1%
versus
the
prior
year.
In 2021,
IXS
returned
to
profitability,
successfully
generating
CHF
8.9
million
in
EBITDA
and
6.4%
EBITDA
margin.
The
division
managed
its
cost
base
while
meeting
demand
and
ensuring
customer
satisfaction.
The
IXS
business
continues
to
focus
on
its
realignment
strategy
including
cost
reductions,
virtual
installations,
discontinuing
of
low
margin
custom
work,
and
investments
focused
on
the
semiconductor
and
electronics
device
arena.
Results
from
these
efforts
will
continue
to
materialize
and
add
to
future
profitability
of
the
division.
The
X-Ray
Modules
division,
IXM,
achieved
sales
of
CHF
78.9
million,
a
28.4%
increase
compared
to
2020.
EBITDA
margins
improved
by
470
basis
points
to
19.4%
in
2021.
IXM's
core
markets
showed
gradual
recovery.
In
particular,
demand
increased
in
the
second
half
of
2021
in
non-destructive
inspection
and
security.
The
division
also
benefited
from
commercial
success
of
its
new
products,
Ion
modules
for
security
applications,
and
the
MesoFocus
product
line
targeting
the
semiconductor,
electronics,
and
battery
markets.
In
summary,
a
booming
semiconductor
market,
improved
X-ray
market
conditions,
focus
on
strategic
objectives,
targeted
product
development,
and
improved
productivity
measures
produced
historically
high
and
excellent
results
for
the
group.
Next,
I'd
like
to
provide
a
few
comments
on
the
balance
sheet
and
cash
flow
metrics.
The
solid
performance
of
the
group
has
continued
to
allow
for
healthy
balance
sheet
position
at
December
end
2021
with
a
cash
position
of
$115.5
million.
Comet
generated
CHF
57.8
million
in
free
cash
flow.
As
I
previously
mentioned,
this
free
cash
flow
result
is
a
record
for
Comet
and
was achieved
through
strong
operating
cash
flow
performance.
Operating
activities
generated
CHF 70.5
million
in
net
cash, an
improvement
of
CHF
13.4
million
compared
to
2020.
Capital
expenditures
totaled
CHF 11.5
million
and
represented
2.2%
of
sales
in
2021,
reflecting
timing
shifts
in
the
Q1 2022
of
capacity
expansion
projects
in
our
Flamatt,
Switzerland
facility.
As
a
result,
we
expect
that
our
CapEx
expenditure
in
2022
will
be
at
the
upper
end
of
our
targeted
range
of
3%
to
5%
of
sales.
Our
CapEx
investment
profile
reflects
our
strategic
priorities.
We
will
continue
to
target
investments
in
production
and
R&D
capacity
in
several
locations
globally.
We
will
also
invest
in
digitalization
and
cybersecurity
efforts.
Net
working
capital
management
continues
to
be
a
focus.
Performance
is
in
line
with
our
target
of
20%
net
working
capital
as
a
percent
of
sales.
Networking
capital
was
CHF
30.1
million
higher
than
at
the
same
time
last
year,
reflecting
our
growth
expectations
and
our
supply
chain
mitigation
actions
taken
to
predict
the
company's
ability
to
meet
customer
demand.
Our
favorable
cash
flow
generation
has
resulted
in
a
negative
net
debt
position
for
the
company.
We
will
continue
to
allocate
capital
to
strategic
projects
focused
on
business
growth.
We
also
want
to
– we
want
our
shareholders
to
participate
in
the
group's
success
through
an
attractive
annual
dividend.
Our
goal
is
to
maintain
healthy
and
flexible
balance
sheet, and
our
performance
in
2021 reflects
the
same.
And
finally,
with
respect
to
our
capital
return
to
investors.
Earnings
per
share
has
more
than
doubled
to
CHF
8.68
per
share
compared
to
CHF
3.56
per
share
in
2020.
Our
outstanding
operational
performance
enabled
us
to
return
a
dividend
to
our
shareholders
at
the
upper
end
of
our
guided
payout
range.
Consequently,
the
board
of directors
will
recommend
at
the
next
annual
general
meeting
a
dividend
of
CHF
3.50
per
share,
representing
a
40%
payout
ratio.
In
summary,
the
company
executed
exceptionally
well
in
a
challenging
environment
and
is
well-positioned
to
deliver
on
our opportunities
going
into
2022.
From
my
side,
I'd
also
like
to
take
a
moment
to
thank
our
employees,
our
customers,
our
suppliers,
and,
of
course,
our
shareholders
for
their
substantial
contribution
to
our
success
in
2021.
As
Uli
mentioned,
additional
details
on
our
Annual
Report
and
2021
Performance
can
be
found
on
our
website
published
on
our
website
this
morning.
So,
this
concludes
my
prepared
remarks.
And
I'll
now
hand
it
over
to
Kevin
to
provide
a
little
bit
more
color
on
our
outlook
going
into
2022.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Great.
Thank
you,
Lisa.
Much
appreciated.
All
right.
So,
I'm
going to
talk
a
bit
about
what
we
think
is
going to
happen
in
2022
and
I'll probably
take
some really other
comments
on
the
future
beyond
that
as
well,
I'm
sure.
So,
let
me just
talk
what's
going
to
happen
really
in
2022. And
I'll
go
from
left
to
right
as
always.
In
the
semiconductor
space,
it's
definitely going
to
be
a
strong
year
throughout
2022
depending
up on
who
you
talk
to
and
who
you
listen
to.
You're
going to
get
a
forecast
of
anywhere
between
up
15%
to
up
20%.
And
I
would
tell
you
if
you
were
only
one
month
earlier,
you
would
have
had
people
telling
you
it's
going
to
be
maybe
8%
or
9%
or
10%
growth.
So,
right
now,
I
would
say
barring
any
other
factors,
the
trend
is
more
up
into
the
right.
So,
15%
to
20%
wafer
fab
equipment
growth
seems
to
be
quite
probable.
And
so
we've
gone
from CHF
63
billion
last
year
in
wafer
fab
equipment
spend
last
year
being
2020
to
2021
of
about
CHF 85
billion.
And
it
looks
like
it
will
be
about CHF
100
billion
in
wafer
fab
equipment
spend
in
2022.
And
these
numbers
are
going to
be
bouncing
around
for
a
little
bit.
They
won't
be
consolidated
by
the
industry
probably
for
another
month.
But
that
can
give
you
a
very
good
feeling
for
where
things
stand
at
the
moment.
So,
we're
going to
ride
that
semi
wave.
I
already
see
people
that
are
looking
and
forecasting
2023. 2023
right
now,
generally
speaking,
as
being
high-single
digit
forecasted
growth.
At
this
point,
more
than
one
year
away.
In
the
middle
there
with
the
automotive
sector,
we
do
expect
that
we
will
see
continued
recovery
in
the
automotive
sector.
You
can
see
the
number
here.
It's
going
to
be
about
a 9%
growth
in
production
year-over-year.
This
is
an
estimate
that
was
done
by
IHS
just
this
month. So,
it
will
be,
I
don't
know,
3
to
4
times
higher
rate
of
growth
than
what
we
saw
in
2021.
And
that
would
[indiscernible]
(00:39:11)
very,
very
good
items
for
the
team
in
the
IXM
and
IXS
businesses.
I
would
also
say
and
remind
you
that
the
content
in
vehicles,
whether
it
– sorry –
the
electronics
content
in
vehicles,
irrespective
of whether
it's
an
EV
or
a
non-EV
vehicle,
it's
really
coming
on
quite
strong,
it's
going
to
be
about
$1,000
per
vehicle,
that's
almost
2x
what
we
were
saying
would
be
in
this
timeframe.
Most
pundits
were
saying
it
would be
about
$500
at
this
time
this
year,
and
it's
actually going
to
be
about
$1,000.
That's
really
great
for
PCT,
it's
great
for
IXS
and
it's
great
for
IXM.
And
I
would
say
that
because
of
this
transition
to
the
EV
as
well
that
I
mentioned
earlier,
that's
going
to be
a
big,
strong
pull
for
the
businesses.
So,
I'd
say
it's
going
to
be
in
that
9%
or
slightly
higher
growth
in
our
served
sectors.
In
the
aerospace
sector,
we
think
that's
going to
continue
to
recover.
It's
not
going
to
be
a
rapid
climb
out,
but
it's
still
going
to
continue
to
improve,
and
it'll
be
in
the
high-single-digit
area
of
growth.
Asia
will
continue
to
lag
probably
for
the
first
half
of
this
year,
but
from
a
long-term
perspective,
Asian
travel
in
particular
is
going
to
be
a
driver
overall
in
the
aerospace
sector.
Private
aviation,
defense,
they're
still
very
strong
and
will
continue
to
be
very
strong,
although
it's
a
relatively
small
niche
in
the
aerospace
sector
overall.
In
the
security
arena,
we
will
see
growth
in
the
security
sector
that
will
primarily
drive
IXM.
We
will
continue
to
see
that,
and
I
think
it's
going to
be
in
the
high-single-digit
range, and
we'll
see
that
structural
travel
growth
in
Asia,
also
will
pull
the
businesses
along.
So,
in
the
aggregate,
we're
going to
see
very,
very
strong
pull,
we
think,
through
2022.
So,
if
you
take
that
backdrop
and
then
look
at
what
we
have
to
do
and
what
our
opportunities
are,
it's
really
again
the
matter
of
seizing
our
opportunities
that
are
put
in
front
of
us,
stay
focused
on
what
we're
trying
to
accomplish,
stay
focused
on
our
strategy,
stay
focused
on
our
served
markets,
and
take
the
opportunities
that
are
put
in
place
in
front
of
us.
And
as
long
as
we
execute
to
that,
you'll
see
that
if
you
look
at
these
bullets
on
the
right-hand
side
of
this
slide,
it's
basically
showing
that
our
TAM,
our
total
available
market
is
growing
by
something
like
1.5
times
between
2020
and
2025.
But
our
served
available
market
is
growing
by
more
than
2.5
times
in
the
same
period.
So,
our
SAM
is
growing
faster
than
the
TAM
that
we're
in,
and
you
can
see
the
bulk
of
that
is
coming
from
the
electronics
and
the
semi
space.
And
that's
really
coming
on
the
backs
of
us
opening
up
this RF
generator
space
that
we
just
– remember,
we
got
our
first
purchase
order
in
for
the
[ph]
DaVinci (00:42:39)
product
and
it's
also
because
of
our
penetration
with,
quite
frankly,
the
IXS
businesses
in
the
3D
architected
space,
advanced
packaging.
So,
to
keep
pace
with
that,
what
we
need
to
do
is
focus
on
all
of
these
major
bullets
that
you
see
on
the
left-hand
side
of
this
slide.
PCT,
they're
going
to
be
like
durables
in
a
cage,
they
just
got
to stay
in
front
of
the
growth
that's
being
pulled
by
the
semi
space.
And
that
means
that
we've
got to
take
along
capacity;
we
got
to stay
ahead
of
what
our
customers
demand
forecast
looks
like,
we
have
to
get
more
generator
variants
into
the
market.
Remember,
this
generator
is
a
platform,
it's
not
a
singularity.
And
when
I
say
platform,
in
the
industry,
we
have
power
and
we
have
frequency
domains
that
we
must
be
able
to
operate
in.
There
is
no
one
size
fits
all,
and
so,
there
will
be
multiple
variants
that
we'll
be
launching
during
the
course
of
this
year
and
next
year. So,
it's
going
to
be
a
continuous
wave
of
products
in
this
RF
generator
category.
So,
our
next
variants
will
also
go
into
beta
testing
in
2022.
I
already
mentioned
we're
going to
expand
our
market
share
in
the
RF
matchbox
space,
that's
an
opportunity
for
us,
and
we
think
that
we
can
do
that
quite
successfully.
And
we
want
to
maintain
our
vacuum
capacitor
share.
We're
sitting
at
in
that
70%
to
80%
market
share
range.
So,
this
is
a
protect
that
domain
in
the
future.
And
as
Lisa
just
mentioned,
and
as
I've
mentioned
as
well,
we
have
to
make
sure
that
we
ramp
this
Penang
factory.
So,
we
expect
that
the
factory
will
be
filled
by
to
nearly
60%
by
the
end
of
2022.
Again,
it
was
filled
at
about
20%
in
2021,
so
60%
in
2022,
we'll
start
to
see
the
benefits
in
a
real
meaningful
way
in
the
cost
of
goods
sold
side
of
the
equation.
In
IXS,
we've
got to
continue
that
transformation.
I've
mentioned
it,
Lisa
has
mentioned
it.
You
know,
look,
the
performance
of
that
division
improved
quite
significantly,
but
it's
not
there
yet.
So,
we
still
got
another
year
or
two
of
progress
that
we
need
to
make.
And
that
means
we
need
to
be
dead
nuts
focused
on
the
semi
space.
We
need
to
move
the
product
lines
in
that
direction.
We
still
need
to
take
a
few
more
products
out
of
our
portfolio.
We
need
to
get
on
one
software
platform.
We
need
to
reduce
our
cost
structure,
not
in
any
sort
of
lay
off
situation.
That's
not
what
I
mean. But
we
need
to
reduce
our
overall
cost
structure.
For
example,
we
still
use
an
inordinate
amount
of
representatives
and
agents
in
the
industry
to
go
to market.
Well, that
comes
at
a
very
high
cost.
Hence,
while
we're
trying
to
get
more
direct
boots
on
the
ground
in
our
served
available
markets
[indiscernible]
(00:45:48).
And
so
we're
going to
invest
in
that
semi
space
and
we're going
to invest
in
new
products
in
that
semi
space.
And
we
are
going
to
reap
what
we
can
as
a
cash
cow of
the
automotive
and
the
aerospace
sector.
And
then
in
IXM,
just
grow share in
our
markets
with
the
new
products
we
mentioned.
We've
already
mentioned
a
massive
focus
in
the
Ion
products.
We
need
to
continue
that
ramp.
We're
going to
invest
in
further
products
for
the
semi
space,
particularly
from
that
items
that
are
used
at
the
sub-10
nanometer
design
node.
That's
going to
be
important
for
the
IXM
business.
And
IXM
is
also
going
to
start
investing
further
into
our
presence
in
Asia.
Which
kind
of
gives you
the
idea
of
my
previous
two
slides.
Of
course,
I'm
very
bullish
about
what's
going
to happen
in 2022
with
one
dot,
dot,
dot
point
that
I
need
to
make
sure
that
I
acknowledge.
And
that
dot,
dot,
dot
is
a
geopolitical
situation,
do
drive
uncertainties.
And
the
Ukraine
situation,
in
particular,
is
clearly
disturbing.
Right
now,
today,
the
impact
on
our
business
is
very
negligible.
At
this
point,
we
have
very
little
revenue
risk
and
when
I
say
very
little,
it's,
I
mean,
really
little.
And
at
the
same
time,
our
supply
chain,
so
far,
we
have
not
seen
anything
in
our
supply
chain
to
give
us
concern.
Of
course,
that
could
change
tomorrow
or
the
day
after.
We've
taken
these
accounts
into
our
guidance.
We've
taken
our
supply
chain
challenges
that
were
already
pre-existing
to
come
up
with
the
guidance
you
see
here
of
CHF 570
million
to
CHF
610
million
in
2022.
And
I
would
say
that
that
is
well
on
line
with
what
our
overall
strategy
would
indicate
that
we
were
trying
to
accomplish.
I
think
Serge
is
going to
ultimately
ask
me
a
question, well,
what's
the
upside
to
that?
And
there
is
upside.
Of
course,
I'll
admit
that.
But
there's
also
downside
to
this
as
well.
And
we've
tried
to
be
right
through
the
middle
and
tell
you
what
we
feel
at
the
moment
in
this
time.
And
our
EBITDA
margin
21%
to
23%.
We're going
to
continue
to
invest,
as
Lisa
mentioned,
in
the
business.
Infrastructure
is
going to
be
important
to
us,
new
products
is
important,
capacity
is
important. We're
going
to take
on
inventory
to
make
sure
that
we
can
manage
the
demand
side
from
our
customers.
So,
that
kind
of
gives
you
a
flavor
for
how
our
EBITDA,
we've
tried
to be
quite
careful
about
what
we
project
our
EBITDA
performance
to
be.
So,
I
think
our
focus
really
is
on
growth.
We
have
to,
yes,
of
course,
improve
our
efficiencies
overall
and
we
will
continue
to
do
so.
And
of
course,
we
want
to continue
to invest
in
our
people,
in
our
culture.
So,
I
would
say
we've
got
to be
steady
as
she
goes.
And
I
think
the
last bullet on to
that
growth
and
efficiency
and
culture,
we
have
to,
as
a
company,
continue
on
a
path
to
become
an
employer
that's
attractive
to
new
employees
coming.
This
is
going
to
be
a
problem
for
the
entire
industry,
it's
a
problem
for
Comet
as
well.
We
need
to
be
able
to attract
talent
to
our
company
disproportionately,
to
the
guys
that
are
up
the
road
from
here,
like
[ph]
VAT
or
the
Infracon
or
the
Fibers
(00:49:30) or
whoever it
is
that
are
out
there.
We
need to
get
more
talent
than
they
do.
And
so,
we
need
to
be
focused
on
gathering
that
in
the
industry.
So,
we're
going
to be
really
focusing
on
attracting
and
recruiting
skilled
workforce.
We
are
going
to
be
really
clear
about
university,
for
example,
university
relationships,
etcetera,
we
have
to
go
and
farm
that
for
ourselves.
It's
not
going to
come
to
us.
We
are
going to
have
to
manage
the
supply
chain
irrespective
of
the
conflict
that's
going
on
right
now,
we
will
be
facing
a
situation
very
similar
to
2021 that
we're
going
to
have
to
manage
our
supply
chain
prudently
through
the
entire
2022.
And
in
some
cases,
I
think,
maybe
even
into
2023.
Now
I
know
people
were
already talking
about
a
second
half
recovery
in
the
supply
chain,
again
disregarding
Ukraine.
People
are
saying
maybe
second
half
of
2022,
there's
a
recovery.
Well,
I
hope
with
some,
their
mouth
to
the
lord
above,
because
I
personally
believe
that
it's
probably going
to
be
a
whole
2022
period
where
we
have
to
manage
our
supply
chain
and
manage
them
very,
very
closely.
And
then
we
are going
to
have
to
mitigate
energy
costs,
rising
costs
in
our
supply
chain
as
well,
logistics
costs,
so
far,
we've
been
able
to
prudently
and
fairly
pass
those
costs
on
to
our
customers.
And
they've
been
able
to pass
those
costs
on
to
their
customers
as
well.
It's
a
well-known
phenomenon,
but
at
the
same
time,
I
will
say
we
are
not
trying
to
raise
our
prices
in
an
extortionate
way at
all. So,
we're trying
to
be
quite careful
about
how
we
thread
that
needle.
All
right?
So,
that
gives
you
an
idea
what our
guidance
looks
like
at
the
moment.
Again,
I
want
to say
thanks
to
you
all
for
your
interest
in
the
company
and
the
interest
as
shareholders,
thank
you
for
supporting
us
and
thanks
to
our
customers
and
our
employees
as
well.
And
with
that,
I'm going
to
go
ahead
and
open
it
up
for
questions.
I
know
we've
gone
a
little
bit
long,
but
happy
to take
as
many
questions
as
anybody
would
like
to
ask.
Okay.
I'll
go
sit.
I'll
try
to
sit
down.
U
Ulrich Bernhard Steiner
Thanks a
lot,
Kevin,
Lisa,
for
all
your
explanation.
And
I'm
sure
that
you
have
a
lot
of
questions
now.
As
we
have
somebody –
a
few
colleagues
on
the
phone, so
please
wait
with
your
questions
until you
got
the
microphone
from
[ph]
Ines
or
Cornelia (00:52:11),
my
two
colleagues,
so
that
everybody
can
hear
it
on
the
phone.
Are
we
ready
on
the
phone?
Okay.
So,
the
first
question
is
from
[ph]
Michael. Michael
(00:52:24), please.
U
Thank you. Is this
working?
Yes.
Thank
you.
Two
questions,
actually.
You
mentioned
the
importance
of
direct
sales
and
service
in
Taiwan
in
the
semi
industry.
And
I
was
wondering
if
semiconductor
production
gets
more
geographically
diversified
around
the
world,
more
regionalized, nationalized.
How
will
you
service
your
customer?
How
are
you
preparing
to
get
that
direct
service
in
sort
of
the
changing
environment in
semi? And
I'll
ask
the
second
one.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Okay.
Thank
you,
[ph]
Michael (00:53:07).
First of
all,
it's
absolutely
clear
that
nationalization
is
going
to
occur
in
the
semiconductor
space.
There's
no
doubt
about
that.
Our
situation
as
Comet
is
that
regionally
we're
very,
very
well-positioned
direct
in
Europe,
quite
well-positioned.
So,
I
don't
see
that
as
an
issue.
And,
of
course,
our
biggest
development
area
for
PCT
is
in
the
West
Coast of
the
United
States.
So,
quite
well-positioned
for
the
new
fabs
that
were
just
recently
announced
going
into
play
in
North
America.
We're
going to
have
to
continue
to
expand
our
footprint
in
Asia.
And
what
I
mean
by
that
is
we're
going to
have
to
continue
to
put
more
people,
sales
and
service
on
the
ground
in
Taiwan.
We're going
to
have
to
do
the
same
thing
in
Korea.
We
do
have
a
development
center
and
an
applications
development
center
in
Korea
already. But
we
actually
don't
have
the
sales
and
service
team
in
place
in
Korea
as
well.
So,
we're
going to
need
to
do
that.
In
China,
we
are
kind
of
a
mixed.
We're
a
mixed
business
model
there.
We
do
use
quite
a
few
reps
and
agents
with
a
core
of
our
own
employees
with
boots
on
the
ground.
We're
going to
expand.
We're going
to
invest
in
that
so
that
we
become
less
reliant
on
the
agents
that
we
have
there.
And
that
intimacy
is
extremely
important.
Our
customers
need
to
have
a
direct
interchange
with
somebody
that
carries
a
Comet
business
card.
It
gives
them
a
degree
of
comfort.
It
gives
them
a
great
degree
of
satisfaction.
And
it lets
them
know
they're
dealing
with
the
entity
and
not
with
a
third
party
to
get
to
us.
So,
I
think
it's
quite
crucial.
It
will
require
more
than
maybe
the
business
model
of
Comet
has
been
in
the
past
because
we
will
have
to
become
more
geographically
diverse.
But
we're going
to
go
do
that,
and
it's
the
right
thing
to
do
anyway
as
a
company
that's
growing
in
the
way
we
are.
U
Thank
you.
And
the
second
question
is
on
IXS,
the
order
you
got
from
TSMC
for the
advanced
packaging.
Is
it
an
in
line
or
at
line
application
and
is
it
a
systematic
testing
of
every
product
or
– and what's
the
pipeline
looking
like
for
that
kind
of
business?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Yeah.
Great.
Thank
you
for that
question
as
well.
So
just
to
be
clear,
I
said
the
world's
largest
foundry.
I
don't
think
I
said
the
[ph]
T (00:55:48)
company,
but
you're
probably
right.
No,
you're
right.
The
situation
there
is
that
it's
offline
–
it's
being
used
for
offline
testing,
so
it's
mostly
used
for
failure
analysis
and
for
quality
assurance
purposes.
And
what
that
means
is
this
is
for
this
particular
customer
to
prove
out
their
process
flows.
I've
sort
of
said
this
a
bit
repeatedly,
and
I'll bore
you
guys
with
this,
but
I
think
in
the
future,
it
will
evolve
into
an
at
line
test
protocol
that
the
industry
follows.
But
in
in
line
test,
meaning,
every
single
wafer
or
every
set
of
package
devices
being
inspected
using
X-ray,
every
wafer
day
in,
day
out,
24
hours
a
day, 40
wafers
an
hour.
I
struggle
to
see
the
ability
to
actually
solve
that
physics
problem
at
that
rate.
I
mean, you're
talking
about
being
able
to
put
a
test
article
into
a
product,
whether
it's from
Comet
or
from
somebody
else,
put
it
into
that
X-ray
platform
and
have
it
settle
because
[ph]
we're
moving (00:57:10)
granite,
thousands
of
pounds
of
granite
that
has
to
step
and
settle,
and
then
actually
do
an
X-ray.
And
to
do
that
in
6
seconds,
that's
what
you
would
have
to
be
able
to
do.
And
right
now
the
industry
would
struggle
with
being
able
to solve
that
that
physics
problem.
But
doing
it
in
an
at-line
mode,
meaning
an
AQL
level,
an
acceptance
quality
level
of
testing
where
you're
testing
x
number
of
articles
every
20
minutes,
maybe
6
minutes
in
that
range.
That
probably
becomes
quite
interesting.
Our
view
right
now
in
our
business
plan,
in
our
model,
we've
only
said, our
model
online. So,
that can
kind
of
give
you
the
idea
that
we're
being
conservative
because
there
is
a
challenge
that
we
need
to
go
and
address.
And
the
way
we
may
be
able
to
address
that
6
minute
or
6
to
20
minute
inspection
challenge
is
with
our
acquisition
of
ORS,
optical
research
systems.
And
for
those
of
you that
aren't
familiar
with
that,
this
is
a
part
of
our
company
now
that
specializes
in
artificial
intelligence
and
machine
learning,
where
you
can
imagine
taking
a
blurry
image
via
X-ray,
and
because
of
the
learning
that's
occurred,
you
can
actually
make
a
reasoned
decision
that
that's
a
known
good
device
or
a
known
bad
device
without
having
a
perfect
picture.
That's
exactly
what
happens
in
the
CT
space
in
the
medical
sector,
for
example.
That's
exactly
what
happened
in
some
of
the
automotive
inspection
arena
as
well.
So,
the
proof
points
of
that
are
there.
It's
what
happens
in
optical
inspection
in
the
semi
space
already.
So,
it's
not
a
leap
of
faith
to
get
to
that
point.
But
we're
probably
a
couple
of years
away
from
that,
[ph]
Michael (00:59:25).
U
Right. So,
the
sales
pipeline?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
So,
the
sales
pipeline,
again,
remember,
this
is
a
failure
analysis
and
quality
assurance
adaptation
right
now.
The
overall
served
available
market
for
this
by
2025
is
somewhere
in
that
100,
plus
or
minus
150
systems
in
that
range.
So,
it's
double
handfuls
of
tools
that
are
being
sold
for
this
application
today
in
our
pipeline.
In
our
pipeline,
we
have
quoted
to
some
seven
or
eight
different
customers
with
multiple
systems.
So,
we
think
we're
right
in
the
mix
of
it
and
in
very
good
shape.
Okay?
U
Ulrich Bernhard Steiner
Thank
you,
[ph]
Michael (01:00:20).
May
I
also
ask
you
to
state
your
name
and
company
so
that
the
audience
on
the
phone
knows
who's
talking.
Serge
next,
please.
S
Serge Rotzer
Yes.
Good
morning.
Congrats on
result.
Yes,
my
name
is
Serge.
Serge
Rotzer
from
Credit
Suisse.
I
have
many
questions,
but
I
will
try
to
focus
on
a
few
ones.
The
first
is
you
mentioned
the
order
book,
that
your
order
book
is
full
with
orders
you
got
almost
two
years
ago.
So,
can
you
share
with
us
how
much
of
the
order
book
is
covering
your
sales
guidance
already
to
get
a
little
bit
of
the
visibility you
have?
That
would
be
question
one.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Great.
Thank
you,
Serge.
Let
me
clarify
because
I
probably
didn't –
either
I
said
it
too
fast
or I
didn't
say
it
clearly
enough.
The
order
book
that
I
was
referring
to
specifically
was
related
to
the
Industrial
X-Ray
Systems
business
IXS.
And
in
terms
of
what
percentage
of
our
order
book
for
2022
does
that
cover,
I
would
tell
you
that
it's
substantially
more
than
half,
without
giving
you the
specificity,
if
you don't
mind,
because
that
– it
becomes
a
bit
competitive
when
we
talk
about
it.
So,
for
IXS,
it's
quite
a
long
range
view
of
what's
happening
in
the
business.
Overall,
our
book-to-bill
for
2021
was
in
excess
of
1,
which
gives
you
a
good
idea
that
all
of
the
businesses
are
in
good
shape
and
are
scheduled
to
grow.
S
Serge Rotzer
Okay.
This
is
very
helpful.
Thank
you
so
much.
Then
I
will
move
to
the
sales
guidance.
This
implies
growth
will
be
in
11%
to
19%
if
I'm
not
wrong,
I
think
this
is
a
fair
guidance at
the
point
of
time.
But
it's
a
wide
range
as
well,
like
others
do –
other
companies
do
the
same
currently.
But
can
you
share
your
thoughts
with
us?
What
is
the
11%
growth
and
what
is
the
19%
growth?
What are
the
triggers
or
what
are
the
downsides
when
we
talk
about
11%
and
19%?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Yeah.
Maybe
I'll
say
a
few
points
on
that,
and
then
I'll
ask
Lisa
if
I've
missed
anything
and,
because
I
probably
will.
On
the
downside,
first
of
all,
the
downside
situation,
we
think
that
we've
bottomed
that
to
at
least
from
what
we
can
see
right
now,
it's
really
what
we
see
as
our
low
probability.
We've
taken
into
consideration
a
probability
that
this
supply
chain
challenge
is
going
to
continue
irrespective
of
the
Ukraine
situation.
So,
the
down
side
would
mean
it
could
get
worse.
But
nobody
can
forecast
that
right
now.
And
as
I
mentioned
earlier,
we
don't
see
a
sales
problem
at
this
point.
We
have
very
little
exposure.
And
to
give
you
a color
on
that,
it's CHF
1
million to CHF
1.5
million.
It's
very
minimal
from
a
company
perspective.
And
our
supply
chain
situation
seems
to
be
okay
relative
to
the
Ukraine
situation
right
now.
But
it
could
worsen.
So,
we've
tried
to
take
into
account
what
could
be
the
worst
case
scenario
as
we
understand
it
that
we
experienced
during
2021
for
the
recovery
of
everything
else
that
was
happening
in
the
supply
chain.
A
further
downside
on
that
would
be,
can
our
major
customers
in
the
semi
space
continue
to
deliver
because
of
their
supply
chain
risks?
And
that's
a
hard
one
for
us
to
really
predict
at
the
moment
because
the
mantra
in
the
industry
has
always
been
copy
exact,
no
changes.
And
as
a
result,
you
become
monolithic
in
your
view.
And
you
have
some
companies
like
my
former
employer
that
they've
got
a
perfectly
optimized
operations,
perfectly
optimized.
Any
bumps,
they
can't
react
to
it
and
the
supply
chain
challenges
or
bumps.
So,
then
they
have
to
go
through
looking
at
alternative
components
and
alternative
suppliers
even.
But
that
violates
their
copy
exact
protocol.
So,
in
our
case,
we
have
been
really
way
ahead
of
the
game
looking
at
new
components,
alternate
components
from
different
suppliers
or
new
designs
to
go
into
a
product,
even
to
the
point
where
we're
looking
at
also
different
geographical
regions
and
we're
buying
a
bunch
parts
to
protect
the
supply
chain.
And
we've
been
a
little
bit
faster
than
some
of
our
bigger
customers.
They're
getting
there.
So
there
could
be
a
lead
lag
situation,
and
what
I
mean
by
that
is
you
could
see
us
a
little
bit more
back
ended
loaded
than
front
end
loaded
first
half
to
second
half.
But
we
have
to
go
manage
that.
So,
I
hope
that
gives
you
the
flavor
on
the downside.
I
think
that
we've
been
prudently
cautious
to
talk
about
where
we
think
the
downside
is.
And
similarly,
upside,
there
is
more
there.
However,
we
have
been
–
we've
taken
into
consideration
as
well
what
our
customers
are
saying
and
what
they've
shown
us
in
their
ability
to
ramp,
and
that
sort
of gives
us
what
we
think
is
the
top-line
potential
as
it
stands
today.
If
the
supply
chain
does
improve
in
the
second
half,
the
supply
chain,
I
mean,
the
worldwide
supply
chain
for
our
customers
and
their
suppliers,
not
just
ours.
If
that
really
happens
in
the
second
half,
like
some
people
believe,
that's
upside.
That's
where
our
upside
comes
from.
S
Serge Rotzer
Okay.
Thank
you
so
much.
Probably,
a
last
one,
if
I
may.
Then
on
the
supply
chain
question
for
Lisa
probably.
When
did
you
notice
the
impact
in
accounting
from
the
supply
chain
–
inventory,
you
had
working
down
and
then
really
had
negative
impact
on
the
margin?
When
did
this
start
last
year,
what
time?
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
I
mean,
I
think
as
we've
said,
we've
been
managing
the
supply
chain
diligently
all
year
long.
So
it
was
something
that
we
noticed,
obviously,
in
the
first
half
of
last
year.
We
baked
it
in
to
the
guidance
for
the
second
half
of
the
year.
I
think
there's
a
few
factors
from
our
perspective
that
we
were
able
to
leverage
to
achieve,
honestly,
the
gross
margin
growth
that
we
did.
So,
most
of
that
gross
margin
expansion
did
come
from
increased
volumes.
But
at
the
same
time,
there
is
a
portion
of
that
that
did
come
from
operational
efficiencies.
So,
we
were
able
to
get
the
factories
operating
more
efficiently,
specifically
in
Flamatt.
We
were
able
to
ramp
Penang
up
to
20%.
So,
those
are
good
things
for
us.
But
then
obviously,
we
were
dealing
with
what
everyone
else
is
dealing
which
is
higher
labor
costs,
higher
raw
materials,
some
longer
lead
times.
Now,
on
the
flip
side of
that, we
were
able
to
also
work
with
customers
to
push
through
some
price
increases.
Majority
of
those
will
flow
through
in
2022.
We
didn't necessarily
see
them
flow
into
the
second
half
of
2021.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Yeah.
One
more
point
to
that,
if
you don't
mind,
is
that
the
overall
exposure
for
us
last
year
and
going
into
this
year
with
the
cost
increase
that
our
supply
chain
has
given
us
to
this
point,
net-net-net,
it's
on
the
order
of
0.5%.
And
with
the
efficiencies
that
we're
talking
about
and
with
the
improved
mix
that
Lisa
just
mentioned,
we've
been
able
to
offset
that
with
a
very
good
degree
of
headroom.
S
Serge Rotzer
Okay.
Great.
Happy
to
hand
over
to
the
next
client.
U
Ulrich Bernhard Steiner
Well,
how
about
[ph]
Harold
(01:08:32) in the back first and
then
[indiscernible]
(01:08:33)
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Yes.
Gentlemen in the back.
[ph]
Mark (01:08:41),
I
believe.
U
Ulrich Bernhard Steiner
Should
be
open.
U
Hello.
It's
[indiscernible]
(01:08:44).
Basically,
two,
I
would
say,
broader
topics.
First
one
is
the
IHS
forecast
on
automotive.
In
the
past,
they
were
mostly
too
upbeat,
and
I
was
just
simply
wondering
what
from
the
midpoint
of your
guidance,
if
now
automotive
production
turns
out
to
be
zero?
What
broad
impact
would
that
be?
And
the
second
one
is,
yeah,
Ukraine,
Russia.
What
is
your
gut
feeling?
What
are
your
customers
thinking?
What
could
the
magnitude
be
and
how
long
could
this
situation
last?
I
mean,
we
are
hearing
that
drivers,
truck
drivers
are
heading
to
Ukraine,
missing
on
the
market,
[ph]
not (01:09:27)
impacting
logistics
clearly,
and
then
probably
also
a
[indiscernible]
(01:09:33)
inflation,
I
mean,
the
risk
meanwhile tilted toward
–
to
the
upside.
What
is
your
broad
assumption
of
the
inflation
for
your
guidance?
Thank
you.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Thank
you.
Thanks
for
the
question.
I'll
take
the
first
two, and
I'll
ask
Lisa
to
comment
on
the
inflation
side
of
things.
First
of
all,
on
–
gosh,
I
got
to remember
the
order
of
the
questions
again.
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
Automotive
first.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
What's
that?
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
Automotive.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Automotive.
Oh.
Yeah.
The
automotive
sector.
The
impact
of
if
it's
a
0%
growth,
just
flat
relative.
And
at
9%
is
what
IHS
sits
right
now,
what's
the
impact
to
our
overall
guidance.
And
to
be
frank,
it's
quite
low,
very
low.
I
would
say
it
doesn't
impact
our
lower
end
of
our
guidance
in
any
way
whatsoever.
Second
one?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Second
was
your...
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
The conflict...
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
...gut feeling on
Russia
and
Ukraine.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
The
conflict
with –
thank
you.
The
conflict
with
Russia
and
the
Ukraine
situation.
That's
a
hard
one.
That's
a
really
a
hard
one
to
address.
And
let
me
just
– we
got
to look
at
the
mosaic
of
what,
in
particular,
the
semiconductor
industry,
how
it
sits.
Many
of
the
raw
and
rare
earth
materials
come
from
Russia.
For
example,
palladium
is
there
40%
of
the
world's
entire
supply
is
coming
from
Russia.
And
every
single
electronic
device
in
the
world
has
palladium
in
it.
So,
there
could
be
a
knock-on
effect
not
directly
to
my
customers
and
my
customers'
customers,
but
at
the
next
level
up
there
could
be
an
impact
there,
right?
So,
it
becomes
a
food
chain
phenomena.
In
the
meantime,
you
can
see
in
South
America
or
even
Latin
America
and
in
China
and
[indiscernible]
(01:11:30)
exact
material
they
are
already
starting
to
ramp
production.
So,
it
might
be
a
cost
impact
that
trickles
down
through.
But
it
looks
like
supply/demand
would
probably
be
okay.
On
the
other
hand,
there's
so
many
things
you
could
look
at.
You
can
look
at
neon.
Neon
is
a
sourced
material
heavily
from
Russia.
You
can
also
look
at
aluminum
and
stainless
steel,
particularly
316L.
All
of
those
are
heavily
turned
down
industrially
by
Russia.
So,
honestly,
it's
an
unknown. I
don't
–
how
long
will
it
last?
It
comes
down
to
where
we
have
a
treaty,
where
we're
not.
It
could
be
just
a
minor
perturbation.
We're
planning
as
if
our
plan
at
this
point
today
is
that
we
know
what
our
top
line
looks
like.
We
know
what
the
impact
currently
today
on
our
supply
chain
looks
like.
We've
looked
at
the
N
minus
2
level.
At
that
level
in our
supply
chain
also
looks
fun
today.
So,
we
think
that
we've
taken
the
prudent
view
today
about
what
the
conflict
is
going
to
orient
itself.
So,
I'm
sure
that
doesn't
really
help
to answer
your
question,
but
that's
how
I –
it's
the only
way I
can
answer at
this
point.
U
Yeah.
Thank
you.
I
mean,
also
a
psychological
question,
how
end
consumers
demand
now
might
[indiscernible]
(01:13:10)
due
to
the
fear
of
spreading
of
the
conflict
of
course?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Yeah.
That
is
a
possibility.
I
think
that
honestly
in
some
respects,
the
semiconductor
industry
as
an
example
right
now
currently
is
kind
of
going
hum, it's
sort
of
like,
hmm, the
pandemic.
Remember,
it
was
an
incredible
growth
year
through
the
years,
through
the
pandemic,
because
societal
demands
are
insatiable
right
now.
And
so,
mostly
the
industry
right
now
is
kind
of
saying,
hmm, well,
look you
have
to
go
figure
out
how
to
deal
with
it,
okay.
My
gut
feel,
this
is
Kevin
Crofton, and
not
Kevin
Crofton,
CEO
of
Comet.
My
gut
feel
is
that
we'll
find
a
way
to
manage
through
it
and
the
businesses
will
be –
likely
to
be
okay,
unless
this
spread
into
a
worldwide
conflict.
And
then
it's
a
different
story.
U
Okay.
Thank
you.
U
Ulrich Bernhard Steiner
Okay,
then
we
have,
Michael.
M
Michael Inauen
Analyst, Stifel Schweiz AG
Yeah.
Thanks very
much.
It's
Michael
from
Stifel.
I
have
two
questions
for
Kevin,
and
one
for
Lisa,
if
I
may.
So,
on
the
supply
chain,
we're
always
talking
about
supply
chain
issues.
But
I
was
just
wondering,
what's
the
– which
parts
are
really
missing
at
your
end
clients
that
they
cannot
deliver
their
tools
or
their
machines?
Because
what
– if
I'm
not
completely
wrong,
VAT suggested
yesterday that
it's
actually
power
tools, there's
a
shortage
in
power
tools.
So,
assuming
some
of
your
competitors
are
not
really able to deliver, which leads me actually to the second
question
for
Kevin. Were
you
able
to sell
your
Synertia generator
because
you
were actually
able
to deliver
it
or
were
you
able
to
sell
it
because
there
is
something
that
you do
better
that
you
can
maybe
now
explain
to
us
because
before,
you
couldn't
do
that?
So,
these
are
my
two
questions
for
you.
And,
the
one
for
Lisa,
probably,
also
answer
it
right
now.
So,
I
was
trying
to
do
a
little
bit
of
maths
here
on
my
notebook
and
I'm
not
the
best
in
math,
actually,
but
when
I
just
make
a
quick
calculation,
the
lower
end
of
your
EBITDA
margin
guidance,
assuming
that
the
IXS
margin,
which
I
think
is
a
little
bit
low
actually
in
2021,
would
just
go
up,
let's
say, 200
basis
points
and
the
rest
will
stay
more
or
less
stable, not
even
taking
into
account
the
Penang
factory,
the
cost
initiatives
that
you
have,
I'm
not
getting
to
the
2021,
I'm
already
getting
more
than
2021.
So,
maybe
you
can
just
elaborate
a
little
bit...
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
I
appreciate
your
optimism.
M
Michael Inauen
Analyst, Stifel Schweiz AG
...maybe if
you could
just
elaborate
a
little bit
how
conservative
you
really
are
on
the
margin
side,
not
on
the
top
line.
But
just
on
the
margin
side,
it
doesn't really
add
up,
in
my
opinion.
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
All
right.
Why don't
I
take
the
margin
question
first and
then
we
can
go
back
to
supply
chain?
So,
I
mean,
I
think
when
we
put
out
the
guidance
for
the
year,
we
are
trying
to
give
a
12-month
outlook,
factoring
in
a
lot
of
different
things.
So,
I
mean,
I
think
to
go
back
maybe
to
the
sales
discussion
because
that's
really
a
large
focus
for
us. So
we're
seeing
the
demand
coming
from
the
customers.
Our
order
backlog
at
the
end
of the
year
was
roughly
50%
higher
than
it
was
at
the
end
of
2020.
And
so, I
think
from
that
perspective,
we
feel
good
about
the
demand that's
coming
in.
We
also
feel
good
about
where
we're
able
to
produce.
I
think
we've
done
quite
a
good
job
in
terms
of
making
sure
that
we
have
the
capacity
to
meet
the
demand
in
the short-term.
Obviously,
I
think
we
need
to
ramp-up
where
we're
spending
from
a
CapEx
side
to
make
sure
that
we're
ramping
capacity
for
where
we
need
to
go
to
2025.
But
at
the
same
time,
the
supply
chain
constraints
are
persistent.
The
other
thing
that
–
and
we
talked
about
supply
chain,
but
we
also
need
to
put
labor
into
that
as
well.
So
there
are
price
increases
on
the
cost
of
labor.
We
need
to
make
sure
that
we
are
retaining
labor
that
we
are
attracting
labor
to
meet
the
goals
that
we
have.
So
I
think
that
just
gives
a
little
bit
of
color
around
the
sales
guide.
And
then,
at
the
same
time,
on
the
profit
side
associated
with
all
the
factors
I
just
explained
with
the
input
costs,
and
obviously,
we're
still
continuing
to
work
with
select
customers
on
pushing
through
price
increases.
And
we've
taken
a
view
on
that
into
the
margin
numbers
as
well.
I
think
the
final
thing,
though,
to
say
on
the
margin
and
I
referenced
it
in
my
prepared
remarks,
but
we
are
investing
in
the
company
and
we
are
investing
in
digitalization
efforts
and
we're
investing
in
cybersecurity
and
some
of the
things
that
we
need
to
do
to
make
sure
that
we
are
creating
a
scalable
organization
to
meet
our
goals
going
into
2025
and
into
the
future.
So
that's
my
view
on
how
we
thought
about
margin
and
what
the
guide
looks
like
for
2022, since
the
supply
chain...
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Okay.
I'll
move
to
–
I'll
take
your
question
on
supply
chain
and
impacts.
I
think
I
held,
Michael,
some
of
his
slides
at
some
point
for
his
presentation.
Look,
the
situation,
if
you
look
at
the
major
subsystems
that
go
into
a
plasma,
a
plasma
piece
of
capital
equipment.
There's,
of
course, VATs
product
lines.
There's
typically
turbo
pumps
and
other
types
of
roughing pumps
from
Pfeiffer
and
companies
like
that.
And
then
you
have
the
RF
power
subsystem,
et
cetera,
et
cetera,
et
cetera.
The
biggest
problem
for
our
primary
customers
is
the
availability
of
RF
power
control
systems.
That's
the
issue.
And
if
you
were
to
look
at
my
–
our
biggest
competitors,
they're
quite
–
well,
of
course,
advanced
energy
and MKS.
They've
been
very
clear
in
their
results
that
they've
reported
multiple
quarters
that
they
are
having
trouble
to
produce.
Their
supply
chain
is
letting
them
down.
And
as
a
result,
there
have
been
missed
opportunities
for
revenue.
And,
of
course,
that
then
has
a
– gives
a
problem
to
the
large
Tier
1s,
okay,
for
sure.
And
so
that's
a
pacing
item.
There
are
other
pacing
subcomponents,
but
that's
the
primary
system.
In
our
case,
you
asked
specifically
were
we
able
to
capture
RF
generator
opportunities?
I
think
as
a
way
to
interpret
your
question,
Michael.
And
I
would
say
no.
But
I
would
say
on
the
RF
matchbox
perspective,
the
answer
is
yes.
And
the
reason
why
that's
the
case
is
that
we're
well-known
as
a
provider
of
RF
matchbox
assemblies.
We're
qualified
across,
most
of
the
Tier
1s
and
Tier
2s
with
RF
matchboxes.
And
so
we're
able
to
step
in
and
take
positions
that
maybe
our
competitors
couldn't
fulfill.
The
generator
is
a
different
story,
and
the
reason
why
that's
different
is,
particularly
in
the
Tier
1s,
they
have
to
go
and
qualify
a
generator,
not
just
on
their
product,
but
then
they
have
to
qualify
that
generator
as
part
of
their
overall
piece
of
capital
equipment
with
the
TSMC's and
the
Samsung's
and
the
Intel's
of
the
world.
And
that's
not
the
work
of
a
moment.
So
even
more
of my
biggest
competitors are
not
able
to
supply
a
generator
that
is
form
fit
function
that
we
can
fit,
no
chances
in
this
timeframe.
There's
no
chance
that
we
would
be
qualified
that
quickly.
We
have
had
a
situation
that
come
up
where
one of
those
very
large
Tier
1s
have
said,
we
need
to
go
qualify
your
product,
in
anger.
But
that's going
to take
time.
But
before
that, it
was
like,
oh
yeah,
we'll
get
to
you.
Sometime,
we'll
talk
to
you.
But
now
it's
become
[indiscernible]
(01:21:55)
so
that's –
but
that's going
to
take
us
time
to
be
fully
qualified
in
a
Tier
1.
Does
that
answer
your
question?
M
Michael Inauen
Analyst, Stifel Schweiz AG
Yes. Perfect. Thank you very much.
U
Ulrich Bernhard Steiner
Thank
you,
Michael.
Do
we
have
one
more
question
in
the
room?
Two
more
questions,
first.
[indiscernible]
U
(01:22:13).
A
couple of
questions
on
the
RF
generator
business. You
said
your
estimate
first
sales
in
2022.
So
could
you
give
us a
ballpark
figure
of what
kind
of
sales you
expect
this
year?
And
then,
you
said
addressable
market
is
CHF
1.2
billion,
do
you have
an
estimate
what
market
share
you
can
get
in
the
midterm
in
this
market
and
will
it
be
more
of
Tier
1
or
Tier
2
suppliers?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Gosh.
That's
a
big
question.
Okay.
First
of
all,
I
will
defer
about
telling
you
what
our
revenue
line
for
2022 is
going
to
be
for
this
generator,
and that's
highly
competitive
information,
first
of
all.
And
to
give
you
an
idea
of
why
we're
so
careful
about
divulging
that
at
this
point,
we'd
rather
talk
about
design
wins
and
first
customers.
And
the
reason
is
because
our
two
competitors
that
I've
already
mentioned,
they've
got
boots
on
the
ground
everywhere
in
the
world.
They
want
to find
out
where
every
single
beta
site
tests
we
have
going
on
is
occurring
and
think
about
what
their
reaction
in
the
marketplace
would
be
if
they
knew
exactly
what
product
at
which
customers
are
being
qualified
on.
They
would
go
to
that
customer
right
away
at
the
highest
level
of
management.
And
they'll
say,
why
are
you
entertaining
those
guys
from
Switzerland?
What
did
we
do
to
not
satisfy
you?
How
do
we
make
it
better?
Can
we
reduce
price?
Can
we –
maybe
we
need
to
give
you
more
people,
maybe
we
need
to
give
you
spares?
They
can
act
like
a
gorilla
in
the
marketplace,
at
least,
that's
what
I
would
do.
So,
I
would
do
everything
I
could
to
prevent
a
Comet
or
[ph]
A (01:24:05) another
to
come
into
my
customer
because
that's
my
customer.
So,
that's
highly
competitive
for
us
to
actually
divulge
that.
But
I'll
try
to
give
you
some
flavor.
We've
been
very
clear
about
saying
we'll
get
revenue
in
2022.
We'll
get
some
more
revenue
in
2023.
It'll
be
interesting
revenue
in
2023.
But
then,
you'll
start
to
see
a
significant
uptick
in
2024
and 2025.
As
long
as
the
product
does
what
we
say
it's
going
to
do,
right?
And
we're
still
in
that
phase
where
the
baby
has
no
words.
It
looks
really
good,
it's
going
to
be,
prince
charming
when
it
grows
up.
We're
still
in
that
phase
right
now.
But
looks
like
it
works,
it
looks
like
it
does
what
we
say
it's
going to
do
on
the
TAM
for
really
one
power
regime
and
one
frequency
regime,
so
far
so
good.
As
long
as
the
other
variants
do
the
same
thing,
then
our
stated
objective
as
a
company
is
that
we
will
take
10%
market
share
by
2025.
And
I've
been
quite
clear
that
I
believe
that's
a
very
humble
objective.
Because
if
the
product
does
in
every
variant,
if
it
does
what
we
say
it's
going
to
do,
by
2025,
we
should
have
a
shot
at
being
– at
least
number
three
in
this
space.
So,
again,
so
you're
talking
about
– we're
talking
about
a
$1.1
billion
to
$1.3
billion
served
available
market
in
2025.
And
we've
been
very
clear
about
stating
our
objective
is
to
be
at
10%
share
in
that
timeframe.
Okay.
It's
going
to
be
in
that
range.
And
that would
be
a
very
major
success
for
the
company.
U
Okay.
Thank
you.
And
then
one
question
on the
CapEx,
you
said
that
you're
expecting
CapEx
to
be
at
the
upper
end
of
the
3%
to
5%
range.
Can
you
give
us
an
indication
of
the
split
between
the
three
divisions?
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
I
can
give
you.
Yeah.
Sure.
I
can
give
you
a
kind
of an
indication
of
where
that
CapEx
will
be
directed.
So,
the
majority
of
that
CapEx
is
related
to
capacity
expansion
and
R&D
expansion.
It
will
be
in
Flamatt,
Switzerland.
Part
of
it
could
be
in
San
Jose,
California.
A
minor
part
of
it
will
be
directed
towards
Penang. And
then,
of
course,
Aachen
is
where
we
have –
Aachen,
Germany
is
where
we
had
planned
to
produce
this
inertia
RF
generator.
So
–
but
the
majority
of
the
CapEx
is
really
around
capacity
expansion,
R&D
expansion.
It
will
be
disseminated
globally.
The
majority
of
our
CapEx
is
in
the
Plasma
Control
Technologies
division.
It's
our
largest
division.
It's
where
many
of
our
strategic
aspirations
are
at
the
moment,
especially
in
the
mid
to
the
long
term.
So,
that's
how
I
put a
flavor
around
the
CapEx.
And
the
other
thing
is
really,
again,
we're
investing
in
digitalization.
And
that
includes
in
operations
and
so
part
of
the
CapEx
is
related
to
those
activities.
U
Very
good.
Thank
you.
U
Ulrich Bernhard Steiner
Sebastian?
S
Sebastian Vogel
Analyst, UBS AG
Okay.
Sebastian
Vogel
from
UBS.
Perfect.
Many
thanks.
I
got
three
questions.
The
first
one
would
be
on
Penang.
Can
you
sort
of
give
an
indication
or
a
rough
indication
of ballpark
figure,
how
much
of
a
margin
help
that
was
already
in
PCT
for
this
year
to
have
a
little bit
of
a
better
sense
what
is
the
potential
going
forward?
And
the
other
one
would
be
on
the
RF
generator.
Just
to
be
clear
there,
is
that
just
mean
one
single
generator
that
has
been
sold
in
these
orders
or
there is a
couple of
machines
been
included
in
there?
And
is
the
delivery
supposed
to
be
happening
next
week,
tomorrow
or
in
two,
three
months'
time
down
the
road?
Just have
a
little
bit
of
a
more
of
a
sense
how
quickly
that
will
turn
into
sales.
And
then
a
bit
of
a
housekeeping
question.
Could
you
share
with
us
the
FX
impact
on
the
sales
number
for
the
different
segments?
That
would
be
great.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Okay. So
you
handle
FX
and
– what
was
the
first
part
of your
question?
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
Can you
repeat
the
first
part of
your
margin
question?
S
Sebastian Vogel
Analyst, UBS AG
Yeah.
Sure.
I
mean,
since
you
have
said
that
you have
already mass
production
to
Penang,
so
the
question
is just
like
what
is
the
margin
support
that
you
have
seen
in
PCT
already
from
this
transfer?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
So,
if
you're
ready...
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
Yeah. I
can
start...
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
...go
ahead.
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
...I
got
to look
at
the
sales
number,
but
I
know
it's
in
the
Appendix.
So,
on
the
margin
side,
again,
just
to
kind
of
repeat
back
what
we
have
seen
happened
in
the
second
half,
so
the
major
thing
here
with
Penang
is
that
we
did
ramp
it
up
to
about
20%
this
year.
And
so,
that
was
on
schedule;
it's
on
plan
and
it
did
what
we
needed
it
to do.
Again,
remember
that
we're
transitioning
from
manufacturing
of
our
matchboxes
from
San
Jose
to
Penang.
So,
the
real
lift
from
that
is
going
to come
2022
and
then
into
the
out years.
In
the
second
half
of
2021,
we
also
needed
to
compensate
for
increases
in
labor,
raw
materials,
components,
etcetera.
So,
just
in
terms
of
where
did
our
margin
expansion
really
come
from,
in
2021,
it
was
generated
from
volume
and
a
favorable
product
mix.
And
as
I
did
say,
a
portion
of
that
gross
margin
expansion
did
come
from
operational
efficiencies.
But
the
lion's
share
of
that
was
really
coming
from
volume.
But
going
into
2022,
the
ramp up
for
Penang
should
be
around
to
60%
and
that
we
should
be
seeing
an
appreciable
increase
in
gross
margin
from
that.
Why
don't
you
take
the
next
one
just
because I
need
to
check
the
actual
number
on
the
FX
side?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Yeah.
So,
one
last
comment
on
that.
The
summary
of
that
answer
primarily
is
that
Penang
was
a
volume
increase
situation
that
we're
trying
to
get
it
filled.
But
the
overall
impact
on
cost
of
goods
sold
is
pretty,
pretty
small
relative
to
the
opportunity,
quite
small
to
the
tune
of,
1
million,
plus
or
minus.
If
you
get
to
60%
capacity
fill,
it
would
be
substantially
more
than
that. And
that's
what
our
plan
has
always
been,
by
the
way,
Sebastian.
So
thanks
for
that
question.
The
second
part of
your
question
about
the
RF
generator,
I
hope
you
all don't
laugh
at
me,
but
remember
I
said
that
we
would
sell
one
in
2021.
We
didn't
quite
get
there.
We
sold
one
a
couple
of weeks
ago.
And
so,
so
just
to
be
dead
nuts,
straight
down
the
line
here,
there
will
be
repeat
orders
from
that
customer,
for
sure.
I
want
to
– I
don't
want
to go
into
the
specifics
of
that,
if
you
don't
mind.
We
have
five
ongoing
data
sites
already
for
that
variant
already,
as
I've
previously
announced.
We
expect
will
convert
a
significant
portion
of
that
into
revenue
and
into
extended
purchase
orders
for
the
year.
And
by
the
way,
that
first
unit,
yes,
it's
shipped.
Yes,
it's
there.
Yes,
it's
at
the
customer.
Yes,
it's
real. Sorry,
I
forgot
that
part of
your
question.
The –
and
then,
we
have
an
objective
to
have
another
handful
or
more
beta
sites
going
on
mid-year,
so
they'll
be
carrying
on
through
the
course
of
the
year.
Can
convert
some
of
those
into
revenue?
I
would
say
between
the
ongoing
beta
sites
we
have
plus
the
new
beta
sites
that
we
have
coming,
there's
probably
the
likelihood
that
we'll
convert
something
smaller
than
a
handful
of
those
into
actual
repeat
orders, it's
just
because
of
the
amount
of time
that
it
takes
to
get
qualified.
Yeah. Hopefully
that
answers
your
question.
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
And
then circling
back
on
the
foreign
exchange,
the
impact
on
sales
year-over-year
2020
to
2021
was
CHF
5
million.
S
Sebastian Vogel
Analyst, UBS AG
And
what's
the split
between
the
two
segments?
E
Elisabeth Pataki
Chief Finance Officer, COMET Holding AG
So,
I
don't
have
it by
the
split
of
segments,
but
the
way
to
think
about
it
is
that
the
majority
of
our
exposure
is
coming
from
US
dollars,
and
that
is
mostly
with
the
PCT customer.
S
Sebastian Vogel
Analyst, UBS AG
Got
it.
Many
thanks.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Thanks, Sebastian.
U
Ulrich Bernhard Steiner
Thank
you,
Sebastian.
So,
we're
already
running
a
little
bit
behind
schedule.
So,
if
there
is
no
urgent
question
in
the
room
right
now,
then
I
would
ask,
and
we'll
come
back
to
you.
After
that,
I
would
ask
if
there
is
one
or
two
question
coming
from
the
phone.
Do
we
have
something
there,
operator?
Operator
There
are
no
questions
registered
at
this
time.
U
Ulrich Bernhard Steiner
Okay.
Perfect.
And
we
have
another
question
in
the
room.
[indiscernible]
U
(01:33:45). Just
a
tiny
question
is
in
reference
to
design
wins.
If
you
win
the
design,
does
it
mean
you
get
the
order?
Or
how
does
that
work?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Okay.
So,
the
question
is,
if
I
– if
we
get
– when
we
say
we
get
a
design
win,
do
you
get
an
order
from
it
right
away?
The
answer
is
yes.
Typically,
what
that
means
is
you'll
get
a
first
set
of
orders
for
depending
on
the
product
that
it's
going
on,
right?
Our
customers
product,
it'll
be,
some
10s
of
RF
matchboxes.
It'll
very
rarely
get 100
units
because
nominally,
you're
getting
qualified
on
either
a
new
product
from
our
customers
or
a
new
variant
from
our
customers
or
you're
in
a
situation
where
you
are
replacing
an
incumbent.
So,
you're
getting
part
of
what
they
are
already
delivering,
not
all
of it.
So,
it's
typically
in
the
10s
for
the
first
orders
that
you're
going to
get.
After
that,
if
it's
on
the
right
product
at
your
customer,
the
right
end
product,
I
mean,
look,
our
biggest
customer,
in
one
of
their
product
ranges,
they're
supplying
500
modules
per
quarter.
Okay, that's at
least
500
RF
generators
per
module
going
out
the
door,
so
it
could
be
substantial
order,
or
it
could
be
with
a
little
tiny
customer
that
maybe
their
entire
production
for
the
entire
year
is
200
modules, depending
on
the
customer
mix,
customer
position.
U
Do
you
pay
the
design?
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Yes.
Under
normal
circumstances,
we
do
all
of
the
design
work,
we
do
all
of
the –
so,
we
do
all
the
engineering,
we
do
all
the
design
for
manufacturing
as
well
as
the
product
engineering.
And
it's
a
wholly
sold
article
from
Comet.
There
are
circumstances
where
we
do
build
to
print,
but
nominally,
what
ends
up
happening
is
it
becomes
billed
to
print
for
the
first
units.
Then
we
do
design
upgrade
on
behalf
of
the
customer
and
then,
it
becomes
a
Comet
design
to
deliver. So,
that's
a
transition
that
occurs.
U
Thank
you.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Thank
you
for
the
question,
[ph]
Daniel (01:36:30).
U
Ulrich Bernhard Steiner
Do
we
have
a
final
question
in
the
room?
[indiscernible]
(01:36:36).
U
Sorry.
If
I
may,
a
final
question
for
me.
On
IXS,
I
was
not
sure.
You
mentioned
that
you
see
some
competitive
headwinds
in
IXS.
Can
you
–
what
is
wrong
if
I
understand
this
not
correctly.
Then
on
IXS,
if
this
is
not
true,
you
showed
a
roadmap.
You
want to
achieve
2025
initiatives
or
something
like
that.
Can
you
give
us
a
feeling
how
much
you
already
have
achieved
of
this
roadmap
and
what
we
can
expect
for
this
or
then
even
later
from
that
and...
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Okay.
U
Yeah.
That's
it.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
All
right.
Thanks for
that
question.
If
I
said
headwinds,
I don't
remember
saying
that
to
be
honest.
You
caught
me
off
guard
on
that one.
Maybe
you
can
whisper
to me
and
tell
me
when
did
I
say
that.
On
the
–
let's
talk
about
the
IXS
transformation.
Maybe
to
try
and
put
that
into
a
broader
context
and
narrow
down
to
where
are
we
headed.
When
I
came
on
board,
we
had
26
different
products,
13
of
which
were
single
one-off
custom
designed
systems
that
were
literally
being
sold
one.
And
then
three
or
four
or
five
years
later,
you'd
sell
one.
And
then
there
were
maybe –
so
there
were
13
of
those.
And
then
there
were
another
13
or
14 that
were
standard
products
that
had
quite
low
margin.
I
want
to
tell you
the
ease
conditions.
So,
that
was
the
ease
condition.
We
also
will –
each
of
those
products,
those
26
things
that
we're
selling,
we're
on
four
different
software
platforms.
Now,
how
does
a
small
company
have
four
different
platforms,
software
platforms
and
being
able
to
support
that
as
an
entity?
That's
like
having
some
of
your
products
on
a
Dell
computer
and
some
of
them
on
a
Macintosh,
as
an
example.
They
don't
work
the
same,
right?
We
also
had
300
agents,
distributors
and
representatives.
Many
of
them
were
historical
from
the
Phillips
days.
Probably
you all
know
this
division
was
formerly
part
of
Phillips,
and
so
the
contract
had
– that
Phillips
had
put
in
place
carried
on
through
that
period.
And
you
kind
of go,
why
is
that
important?
Well,
they
were
contracts
that
were
not
to
the
benefit,
maybe
at
the
time
they
were,
but
in
today's
day
and
age,
the
commission
structure,
the
service
structure,
it
was
not
what
you
would
expect
in
a
capital
equipment
company
that
is
in
the
semiconductor
market.
Wasn't
fit
for
purpose?
So
those
are
maybe
some
three
examples
of
what
the
ease
condition
was
a
year-and-a-half
ago.
We're
down
to
–
we're
down
to
the
point
now
where
we
have
six
products
that
are
actually
standardized
and
real
and
we
can
produce
them
repeatedly.
We
still
have
two
custom
products
that
we're
still
delivering
and
still
building.
We
are
on
two
software
platforms.
And
we
have
a
little
bit
over
50
reps,
distributors
and
agents.
And
where
we're
headed
is
that
we
want
to
get
to
a
point
where
we're
probably going
to
have
seven
products.
And
we're
probably
still going
to
have
one
custom
product
that
we're
going to
deliver
for
a
period
of
time,
because
of
the
nature
of
the
customer
and
the
nature
of
the
industry
that
we're
in,
in
that
particular
case.
By
2025,
we
should
be
on
one
single
platform
from
a
software
perspective,
one.
And
we'll
have
something
less
than
50
partners
in
the
channel.
So,
we're
on
that
and
then
I
should
have
said,
remember,
I
said
we'll
go
from
six
to
seven,
we
might
go
from
six
to
eight
new
products,
because
you
can
imagine
that
we
might
have
a
semi-only
product,
and
electronics-only
product.
Currently,
today,
we
think
it
might
be
that
one
additional
product
will
cover
both
sector
demands.
But
you
can
envision
maybe
that's
not
going to
be
right, because
that
comes
back
to
Michael's
question,
is
it
going
to
be
online
at
line
or
a
one-off
sort of
test
system.
And
that
would
be
a
different
architecture.
So,
where
are
we
in
that
journey?
Okay.
We've
done
the –
we've
done
the
sort
of
easy
part,
sort
of.
And
now
we
need
to
get
through
this
design
and
industrialization
activity.
And
we
probably
have
another
year
to
year
and a
half
to
go
in
this
transformation.
So,
2022
for
IXS,
yes,
it's
is
going
to
be
better.
And
I
hope
that
all
of
you
all
are
believers.
I
remember
coming
into
these
forums
and
there
weren't that
many
believers,
but
hopefully
we've
changed
that.
But it's
going
to
be
–
we
got
work
to
do.
But
I've
lived
it
a
couple of
times
and
I'm
sure
we
can
make
that
happen.
Hopefully,
that
helps
you.
U
Ulrich Bernhard Steiner
Great,
so
thank
you.
Thank
you
very
much
for
your
lively
participation
in
the
event.
We
can
close
the
official
part
of
the
event
right
now.
Thank
you
for
showing
up
here.
Thank
you
also
to the
audience
that
joined
us
over
the
phone.
After
the
meeting
and
here
will
have
served
some
finger
food
at
the
back
of
the
room
and
management,
Kevin,
Lisa
will
also
be
available
for
you
if
you
have
one
or
more
questions.
Also,
thank
to
–
I
would
not
miss
that
to
[indiscernible]
(01:42:55),
who
organized
the
event,
including
the
food
you're
getting
after
that
and
the
drinks.
So
thanks
for
coming,
Zurich
here,
and
I
hope
you
stay
a
while
to
have
a
conversation
with
our
management
team.
Thanks
a
lot.
K
Kevin Timothy Crofton
Chief Executive Officer, COMET Holding AG
Thanks everybody.
U
Ulrich Bernhard Steiner
And see
you
soon.
Operator
Ladies
and
gentlemen,
the
conference
is
now
over.
Thank
you
for
choosing
Chorus
Call
and
thank
you
for
participating
in
the
conference.
You
may
now
disconnect
your
lines.
Goodbye.
Ladies and gentlemen, welcome to the Comet's Full Year 2021 Results Conference Call and Live Webcast. I am Arianna the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions] The conference must not be recorded for publication or broadcast.
At this time, it's my pleasure to hand over to Ulrich Steiner, VP Investor Relations, Comet Group. You will now be joined into the conference room. [audio gap]
(00:00:50-00:00:55) on the phone. Thank you very much for joining Comet's full year presentation for the year 2021. In the following minutes, Our CEO, Kevin Crofton; and our CFO, Lisa Pataki will present you the results of the last year. After the presentation, you will have ample time to ask questions either here in the room, but also over the phone, so we'll open the line after that.
The documents we published today are available on our website since this morning. You can also find the annual report with much more information on our figures on the website. Before we start the presentation, I would again like to remind you of our disclaimer. We will make forward looking statements today, and as you know, there are always uncertainties linked to those forecasts.
With that, I would like to hand over to our CEO, Kevin, please.
Thank you, Uli. Very much appreciated. Great. Good morning, everybody. It's super to see some folks live, all in 3D, which is awesome. I think it's the first one that I've been able to have as CEO of Comet. So, that's fantastic. And also, of course, as Ulrich just said, welcome to all of you. Thanks for being intrepid in making the trip. And for those of you on the phone, thanks for joining. I understand there are a few people that actually were supposed to be here live that couldn't be here because, okay, they've got COVID. So, thanks for not coming. And I hope that you all get a good recovery.
So, this is going to be hopefully an animated and a rich discussion. Hopefully, you all enjoy it. And as Uli mentioned, we will take a break at the end for a Q&A. So, I'll be glad to answer any questions you might have. So, I'm going to talk about what's happened sort of at a high level for 2021. I'll talk about what's happened in the industry in 2021, and then I'll talk later on when we get to the outlook session about what we see for 2022 and a bit beyond that as well.
So, with that, I'm just going to march right into it. First of all, before you've seen the results already. They are, in my view, they're excellent. And this is a result of really hard work from our employees. We owe them a gratitude of thanks, but also the trust that our customers have given us. They are absolutely embedded with us, and it's a privilege to have them as our customers. And, of course, you all that follow us, we appreciate your support as well. So, thank you to you from the Comet team for the results. You've helped us get there and we greatly appreciate that.
Now, relative to the results, we've already said it out loud in a couple of different ways. It is a record year for the company. Lisa is going to go through the actual results in detail, I'm not, but what I do want to stress is that we've had really very nice revenue growth nearly 30% year-over-year revenue growth. It's [ph] hashy (00:04:15), depending upon the division we're talking about, and I'll talk about that in a few minutes.
And of course, our EBITDA margin has actually reached a threshold point. It's a hurdle point for the company to be at 20% EBITDA. And when you run the numbers, you can do the math yourself. It shows you that we did a very, very nice job in the second half of 2021 to get to this level of performance.
So I'm quite pleased with the results as a company and as an organization. So record results for the company really, really positive for us. And I would have to say that most of that comes from staying absolutely relentlessly focus on our strategy, and I'll use that term relentless. We are making sure that we stay true to the core of the company, stay focus on our sort of markets, particularly in the semi and electronics space, but also make sure that we serve the aerospace, the automotive and the security space as well, and I'll talk to that.
In the middle of this page, we talk about the continued progress towards our midterm targets. To remind you our midterm targets 2025, we said that we would have demonstrated at least 15% CAGR year-over-year through the period. We said that we have reached 25% EBITDA. And we've said that we would reach at least 30% ROCE. That's what we said we're going to do. And I can say, we're quite strongly focused on that and we're well on the way to that path. We announced that in 2019, we're two years into that, in that six-year horizon, and quite comfortable with where we sit.
So in the middle of that page, and quite comfortable with where we sit. So, in the middle of that page, progress towards our midterm targets, we're absolutely focused on getting our new products out. We launched new products in 2020 that are bearing fruit in 2001, and as a result, we know, without exception, we've taken market share in 2021. And so, I'm quite pleased that what we've done at PCT, what we've done in the X-ray systems division as well as in the X-ray modules division that we've taken share primarily because of new products that we've launched into this space. And I'll talk about that in a few minutes as well.
We also – overall, I would say that we've really focused on how we are positioned in Asia. And as you know, most of you know, we started our mass production facility dedicated to high volume manufacturing in Penang nearly two years ago. We said we would fill that factory to 20% by the end of 2021, and, in fact, that actually happened. So, we're on track to delivering what we said we would do from the Penang facility, and then also, for those of you all that stuck with us, we also announced that we had established a, I would say, boots on the ground in Taiwan, direct sale, direct service in Taiwan, which is the most important region in the semiconductor industry.
And so, we have boots on the ground, direct sales, direct service, and it's focused on really the top foundries as well as the top OSATs, O-S-A-Ts. Those are the outsource assembly and test companies like ASC and EMCOR and PTI. We've improved our overall production and our overall efficiency. We've nearly doubled – sorry – we've grown our efficiency on employee basis by nearly 50% year-over-year. That's going to continue. We're not world class, that's quite clear, but we are going to get reasonably good performance there. And if I look at the challenges aspect of this, we're all kind of tired of the pandemic, but it was absolutely imperative that we focus on what's happening with our team, making sure that our workplaces are helpful workplace, but also that we're protecting our customers as well. And I can say, we've managed the COVID pandemic environment that still exist in a reasonably good way.
And then as everybody knows, supply chain, supply chain, supply chain, that's the theme of everything we talk about today. It starts off as chips, but it's something now that affects the entire industry whether it's electronics, PCB boards, but also cables, wood for crates. I mean things that we as a society we would think, that must not be that bigger deal maybe, but it is a challenge. And as I've said in many different forums, we've managed this challenge really, really day-to-day.
And the supply chain team has done an incredibly good job getting there. And as a result, we've been able to support our customers and meet the demands that they have. So, I'm quite pleased with the overall performance there.
Now, I have to do say, yes, our results – our result of improving end market conditions in every market we serve, different flavors of how would that improvement looks like. Of course, the semi industry is in a boom cycle still, and I remember people challenged me on the use of the term super cycle a couple of years ago, and I hope that I've convinced everybody to be super believers at this point.
The industry grew somewhere around 34%. I've seen some folks say it might be as high as 4-0, 40% year-over-year, 2020 to 2021. But I can say for sure that that's going to continue. So that gives you a taste of what our outlook looks like as well. So that cycle is fully in play. I would also say that in the automotive space, production is definitely improving. It's lumpy. It's really, really a shallow recovery, but we foretold that going into the year. It's single-digit growth at the moment. It's going to be high single-digit growth quite soon.
But on the other hand, what we do see is this whole uptick of the EV, electric vehicle programs. And so by 2025, we're going to see that EV is going to be more than 50% of all cars, light vehicles, et cetera, that are going to be produced. And why that's important is that drives, in particular, our X-ray businesses. Of course, the PCT business will benefit from that growth as well, but it really is a key factor in the IXM and IXS businesses.
Maybe third to – third over on this slide, it shows a cooled jet engine. Remember, I'm an aerospace engineer, so I really like this. But, the global passenger air travel is increasing, particularly in North America. It continues to recover, we can see the industry is shrugging off the pandemic. It's a little bit lumpier in China, but the rest of Asia looks to be quite strong. And as a result, again, the IXS and IXM businesses will be able to take advantage of that growth as well.
And on the security side, that goes hand-in-hand with the growth in passenger air miles, but also, of course, in the defense sectors as well. So the four primary markets really, really strong growth in 2021 for the semiconductor space, single-digit to high-single-digit growth for the remaining three industries that you see there.
So maybe some comments about what we're trying to do from the fabric of a company perspective. I guess the first thing I would say and I've kind of covered it a little bit ago is our productivity. It's raised. It's increased by almost 50% year-over-year. We are running around CHF 67,000 EBITDA per employee. We expect that to grow obviously by 2022 and that's up 50% from the previous year.
We also can say that our gross margins have improved significantly. You've seen that from our financial results. It's greater than 300 basis points, and I think Lisa is going to – I know Lisa will talk to those details because we've just given big numbers here. So as a result of that, that's from high – of course, high volume, but also our product mix is also improving in all sectors of the business. And it's a varying degrees of how fast we can make that change, for example, IXS. Those products are ordered a year to a year and a half in advance. So we're still flushing those previous orders through our system. But I'll talk about the transformation of that business further in just a few minutes.
In the center there, where we say we strengthened our proximity to our customers, I mentioned that already, but maybe to give you the flavor for that. Currently, now our penetration into the Asian market stands at about 40% of our total revenue, and that's up from about 30% a year prior. So that's roughly a 60% growth year-over-year.
We've also improved our footprint. It says here rapid growth in Taiwan and China. I already mentioned the boots on the ground in Taiwan, direct sales and service in the Taiwanese market. Of course, we're booming in China, that's a significant growth year-over-year. But also we do have our Korean R&D center which concentrates on matchbox assemblies for everybody else but the Tier 1s, and we can explore that later on as well.
Now, in the product and services, I'll get to some specifics when I talk about the actual divisions, but maybe the most important is that we are well on the path to changing the focus of IXS and IXM to be focused on the semi space, the electronic space, and even the battery space. And the reason for that is because these tend to be higher margin, higher volume business sectors than the traditional aerospace, automotive, and security sectors. So, that student body shift is occurring and we're on that path, and I'll talk about some of the products that we launched there in just a few minutes.
And then, on the far right of this page is really our investment in our company, and we're keenly focused on investing in our team. We kicked off a comprehensive talent identification and management program during the year, really to understand our high potential talents and also, who we can grow with within the company. We've sharpened our values. And if I'll remind you, our values really are to be absolutely dead nuts focus on our customers, so customer-centricity is number one.
Number two, we want to challenge and empower our team members. We want them to make decisions at risk. And do that with an open mind and a willingness. And then also to have this whole trustful collaboration, [ph] this idea (00:15:51) that we trust each other, that we are making good decisions, we will work together. And it's a way for us to make sure that it's a team effort of making things happen.
And we did publish our first full compliant GRI report for ESG purposes. You'll see that in the annual report, if you haven't seen it already, it's a comprehensive report. Remember, we were sort of ad hoc on this in previous years. Now, we've got a well-documented situation report, and it's something for us now to build upon. And we'll announce what those metrics and goals are for the company in about middle of the year or slightly thereafter.
Now, a few comments about our divisional performance, and again, I'd say it's quite good. Each one of these divisions have grown to the point where our company has grown on the order of 30% as a group, but each one of these divisions were at the 30 percentile or higher in and of themselves. PCT, of course, was higher, it grew at about 36% year-over-year, which is outpacing the market conditions and outpacing our peer competitors.
Now IXS and IXM both grew at almost exactly 30%. And I would draw your attention to the first bullet – sub-bullet on the left here. For those of that have been waiting with bated breath about when are we going to announce that we finally got a generator in the marketplace, we have sold our first Synertia product, we used to call that [ph] DaVinci (00:17:33), so this is the first RF generator in our new generator family. We have launched that. We have received our first purchase order. Now, I have to admit that I'm shading it a little bit.
And the reason why I say that is because actual PO occurred in the second week of January. So, just to be clear, it happened in January not in December. So, I should be fully transparent on that. But I think it's important that everybody understand that yes we're in the marketplace. Yes, the generator has been sold. And I'm sure you're going to ask me questions about that later. So, I'll just leave it at that.
We did expand our market share in – particularly in the RF matchbox sector. We took 16 new design wins during the course of the year. The bulk of those design wins more than half were Tier 1 level customers. And also I would say that nearly 20% of those also occurred with customers in China. So, good regional distribution, good Tier 1 and Tier 2 distribution. And the reason why this is most important is because that then bears fruit about a year from now. And I'll remind you, last year we took 23 design wins. And as a result, we do expect because of PCT's performance and because of those design wins that we are comfortable that we will be able to say in April that we have taken market share in the RF match space again this year. Last year, we were at 36% market share at number one. We should have advanced that as well. And I already mentioned the product transfer.
On IXS, we use that terminology realignment. It's a euphemism for saying that we have really redesigned that business. This is a work in progress. I'll remind you, I said that we were starting this whole activity about a year and a half ago. That realignment gained momentum. We reduced the number of products that we sell out of that organization. We start doing custom business.
Remember we are doing a lot of one-offs, single-off business items which you would sell one-off, maybe two or three years later, you'd sell another one, and that's a very difficult set of business circumstances to be profitable.
So, we've really moved away from that type of business line, and we have been extremely focused on high quality, high revenue, high margin business in that organization. And I would draw your attention to the second bullet there in a minute. We have received our first hard copy purchase order for a system that is being used for inspecting advanced package devices. This is with the world's largest foundry. That's a major win for us, and it shows that we can be in that space successfully, and that we can probably generate some delight with our customers. And then on the far right here, you see IXM, the module – the industrial X-ray module business. That team has done a really, really good job in introducing new products alongside a recovery in their traditional served markets.
So, we've released the MesoFocus focused product lines into the electric vehicle space, batteries, electronics, but also in the semi space. In addition, though, we've been able to take more share with the Ion product as well particularly in the security space. So, this whole inroad is happening, and I can say that the team is definitely taking market share.
Okay. This is my last slide before I hand it over to Lisa and I would just hope you'll agree with me as well. I think it's been a very good year. We're two years into this six year program. Our strategy is definitely bearing fruit. We're staying focused on it. We are and have been demonstrating at least a 15% growth year-over-year. We're well on track to be at about CHF 830 million or more by 2025, we've demonstrated really good progress on the EBITDA performance. We should be comfortably at that 25% EBITDA range. And we've done – we're very close to the 30% ROCE. And really, the themes are basically this, PCT, the process control technology group, the RF business, just needs to keep doing what they're doing, they need to keep getting the design wins. We need to expand capacity continuously through this period, so that we can stay ahead of the curve in semi.
The X-ray businesses will continue the redesign and the transformation of IXS, but also start to capitalize more and more on the trend in IXM. And for sure, we want to make sure that we have a really nice and successful collaboration with all of our partners, our customers, first and foremost, our supply chain, which probably are getting tired of hearing from all of us at times, but I think if we work together, we'll definitely overcome challenges. And for sure, I have to say again, thanks to our employees, because they've been incredibly dedicated to our success.
And with that, I'm going to hand it over to Lisa and see if you can make your way over.
Thank you. Okay. Perfect. All right. Thank you, Kevin, and good morning to everybody, it's really nice to see you all here in-person. And for those of you on the webcast, a very warm welcome to you as well. I will go through the prepared remarks here a little bit more formally and then looking forward to your questions afterwards.
In 2021, Comet achieved outstanding record high financial results in top line growth, profitability, returns, and generation of free cash flow. As Kevin mentioned, these achievements resulted from our commitment to maintain our focus, gain market share, produce efficiently, and by proactively managing supply chain and COVID-related challenges. Our strong performance has enabled us to return more to shareholders to an annual dividend and to fund the investments fueling our growth strategy.
Now, turning to the actual results of 2021, the company achieved sales of CHF 513.7 million, an increase of 29.8% compared to 2020 which was also a historic year for Comet. Sales volumes increased in each of our end markets and divisions. Our core markets in North America rose 17% compared to the same period last year and account for 42% of the group's total sales. Since 2020, we expanded our geographic footprint with a new production facility in Penang, Malaysia; new subsidiary in Taiwan; expansion of our sales and customer services in Japan; and in our R&D and demo center in Korea. Our ability to be closer to our customers resulted in 60% sales growth in Asia. Asia now represents about 41% of group sales, compared to 33% in 2020.
Gross margins improved by 360 basis points compared to 2020. Each division achieved double-digit growth in volumes with a favorable product mix. This was really our primary lever in driving gross margins for the year 2021. Additionally, faster and optimized production processes led to improved operational leverage that helped offset higher input costs coming from labor, raw materials, components and logistics. Going into 2022, production efficiencies and product mix will further compensate for rising costs.
Operating expenses in 2021 were higher than in the same period last year due to investments in growing the company. We invested in people to manage growth in all areas, including operational excellence, supply chain, sales and marketing, and, of course, in research and development. Our R&D represents roughly 11% of sales and remains the foundational focus for the group with investments focused on medium and long-term strategic projects, mainly targeting the semi and electronics markets. It should be noted that net operating expenses, excluding the 2020 gain from the sale of the ebeam business, as a percentage of revenue, decreased from 30.9% in 2020 to 27% in 2021.
We achieved profitability at the upper end of our guided range as a result of higher sales volumes, product mix, and operational efficiencies. We improved EBITDA from CHF 58.6 million in 2020 to CHF 102.7 million in 2021. This represents 520 basis points improvement to 20% EBITDA margin compared to 14.8% at the same time last year. Our performance grew margins by 590 basis points, more than compensating for 70 basis points of margin erosion due to weaker foreign exchange conversions and the elimination of the 2020 one-time gain from the sale of ebeam.
The effective tax rate for 2021 was 18%, driven by the taxable profit mix generated from our international subsidiaries. We will continue to monitor the potential local tax changes of our subsidiaries, especially as it relates to corporate income tax in the United States and with new changes in the OECD. As a result of our solid operating results, Comet achieved a net income of CHF 67.4 million, representing a net income margin of 13.1% and a return on capital employed of 26.8%.
Now, let's turn to the division results for 2021. Our focus on delivering to our customers operational efficiencies and culture paid off. Each of our divisions achieved double-digit sales growth while expanding profitability. The Plasma Control Technologies division, PCT achieved record performance in sales and profitability, executing remarkably against the backdrop of a booming semiconductor industry.
Sales increased 36.2% from CHF 224.7 million in 2020 to CHF 306.1 million in 2021. PCT achieved sales growth across key geographic markets and with all major customers. In 2021, PCT benefited from the start of its production in Penang, Malaysia, was reached 20% capacity by year-end 2021 and further cost discipline in operations. These factors, in addition to the strong volume, expanded EBITDA margin by 430 basis points versus 2020 to achieve high 26.3% margins.
Division results for the two X-ray divisions reflect the focused strategy and the improving market conditions. Let's start with X-Ray Systems business, IXS. IXS achieved important milestones in its focused realignment strategy. IXS sales growth was complemented by competitive wins, with newly introduced X-ray systems pointed towards the higher growth, higher margin semiconductor and electronics industry. The division contributed CHF 138.9 million in sales, an improvement of 30.1% versus the prior year.
In 2021, IXS returned to profitability, successfully generating CHF 8.9 million in EBITDA and 6.4% EBITDA margin. The division managed its cost base while meeting demand and ensuring customer satisfaction. The IXS business continues to focus on its realignment strategy including cost reductions, virtual installations, discontinuing of low margin custom work, and investments focused on the semiconductor and electronics device arena.
Results from these efforts will continue to materialize and add to future profitability of the division. The X-Ray Modules division, IXM, achieved sales of CHF 78.9 million, a 28.4% increase compared to 2020. EBITDA margins improved by 470 basis points to 19.4% in 2021. IXM's core markets showed gradual recovery. In particular, demand increased in the second half of 2021 in non-destructive inspection and security. The division also benefited from commercial success of its new products, Ion modules for security applications, and the MesoFocus product line targeting the semiconductor, electronics, and battery markets.
In summary, a booming semiconductor market, improved X-ray market conditions, focus on strategic objectives, targeted product development, and improved productivity measures produced historically high and excellent results for the group.
Next, I'd like to provide a few comments on the balance sheet and cash flow metrics. The solid performance of the group has continued to allow for healthy balance sheet position at December end 2021 with a cash position of $115.5 million. Comet generated CHF 57.8 million in free cash flow. As I previously mentioned, this free cash flow result is a record for Comet and was achieved through strong operating cash flow performance. Operating activities generated CHF 70.5 million in net cash, an improvement of CHF 13.4 million compared to 2020.
Capital expenditures totaled CHF 11.5 million and represented 2.2% of sales in 2021, reflecting timing shifts in the Q1 2022 of capacity expansion projects in our Flamatt, Switzerland facility.
As a result, we expect that our CapEx expenditure in 2022 will be at the upper end of our targeted range of 3% to 5% of sales. Our CapEx investment profile reflects our strategic priorities. We will continue to target investments in production and R&D capacity in several locations globally. We will also invest in digitalization and cybersecurity efforts.
Net working capital management continues to be a focus. Performance is in line with our target of 20% net working capital as a percent of sales. Networking capital was CHF 30.1 million higher than at the same time last year, reflecting our growth expectations and our supply chain mitigation actions taken to predict the company's ability to meet customer demand.
Our favorable cash flow generation has resulted in a negative net debt position for the company. We will continue to allocate capital to strategic projects focused on business growth. We also want to – we want our shareholders to participate in the group's success through an attractive annual dividend. Our goal is to maintain healthy and flexible balance sheet, and our performance in 2021 reflects the same.
And finally, with respect to our capital return to investors. Earnings per share has more than doubled to CHF 8.68 per share compared to CHF 3.56 per share in 2020. Our outstanding operational performance enabled us to return a dividend to our shareholders at the upper end of our guided payout range. Consequently, the board of directors will recommend at the next annual general meeting a dividend of CHF 3.50 per share, representing a 40% payout ratio.
In summary, the company executed exceptionally well in a challenging environment and is well-positioned to deliver on our opportunities going into 2022. From my side, I'd also like to take a moment to thank our employees, our customers, our suppliers, and, of course, our shareholders for their substantial contribution to our success in 2021. As Uli mentioned, additional details on our Annual Report and 2021 Performance can be found on our website published on our website this morning.
So, this concludes my prepared remarks. And I'll now hand it over to Kevin to provide a little bit more color on our outlook going into 2022.
Great. Thank you, Lisa. Much appreciated. All right. So, I'm going to talk a bit about what we think is going to happen in 2022 and I'll probably take some really other comments on the future beyond that as well, I'm sure. So, let me just talk what's going to happen really in 2022. And I'll go from left to right as always. In the semiconductor space, it's definitely going to be a strong year throughout 2022 depending up on who you talk to and who you listen to. You're going to get a forecast of anywhere between up 15% to up 20%. And I would tell you if you were only one month earlier, you would have had people telling you it's going to be maybe 8% or 9% or 10% growth.
So, right now, I would say barring any other factors, the trend is more up into the right. So, 15% to 20% wafer fab equipment growth seems to be quite probable. And so we've gone from CHF 63 billion last year in wafer fab equipment spend last year being 2020 to 2021 of about CHF 85 billion. And it looks like it will be about CHF 100 billion in wafer fab equipment spend in 2022. And these numbers are going to be bouncing around for a little bit. They won't be consolidated by the industry probably for another month. But that can give you a very good feeling for where things stand at the moment. So, we're going to ride that semi wave. I already see people that are looking and forecasting 2023. 2023 right now, generally speaking, as being high-single digit forecasted growth. At this point, more than one year away.
In the middle there with the automotive sector, we do expect that we will see continued recovery in the automotive sector. You can see the number here. It's going to be about a 9% growth in production year-over-year. This is an estimate that was done by IHS just this month. So, it will be, I don't know, 3 to 4 times higher rate of growth than what we saw in 2021. And that would [indiscernible] (00:39:11) very, very good items for the team in the IXM and IXS businesses.
I would also say and remind you that the content in vehicles, whether it – sorry – the electronics content in vehicles, irrespective of whether it's an EV or a non-EV vehicle, it's really coming on quite strong, it's going to be about $1,000 per vehicle, that's almost 2x what we were saying would be in this timeframe. Most pundits were saying it would be about $500 at this time this year, and it's actually going to be about $1,000. That's really great for PCT, it's great for IXS and it's great for IXM.
And I would say that because of this transition to the EV as well that I mentioned earlier, that's going to be a big, strong pull for the businesses. So, I'd say it's going to be in that 9% or slightly higher growth in our served sectors.
In the aerospace sector, we think that's going to continue to recover. It's not going to be a rapid climb out, but it's still going to continue to improve, and it'll be in the high-single-digit area of growth. Asia will continue to lag probably for the first half of this year, but from a long-term perspective, Asian travel in particular is going to be a driver overall in the aerospace sector.
Private aviation, defense, they're still very strong and will continue to be very strong, although it's a relatively small niche in the aerospace sector overall.
In the security arena, we will see growth in the security sector that will primarily drive IXM. We will continue to see that, and I think it's going to be in the high-single-digit range, and we'll see that structural travel growth in Asia, also will pull the businesses along. So, in the aggregate, we're going to see very, very strong pull, we think, through 2022. So, if you take that backdrop and then look at what we have to do and what our opportunities are, it's really again the matter of seizing our opportunities that are put in front of us, stay focused on what we're trying to accomplish, stay focused on our strategy, stay focused on our served markets, and take the opportunities that are put in place in front of us.
And as long as we execute to that, you'll see that if you look at these bullets on the right-hand side of this slide, it's basically showing that our TAM, our total available market is growing by something like 1.5 times between 2020 and 2025. But our served available market is growing by more than 2.5 times in the same period. So, our SAM is growing faster than the TAM that we're in, and you can see the bulk of that is coming from the electronics and the semi space. And that's really coming on the backs of us opening up this RF generator space that we just – remember, we got our first purchase order in for the [ph] DaVinci (00:42:39) product and it's also because of our penetration with, quite frankly, the IXS businesses in the 3D architected space, advanced packaging.
So, to keep pace with that, what we need to do is focus on all of these major bullets that you see on the left-hand side of this slide. PCT, they're going to be like durables in a cage, they just got to stay in front of the growth that's being pulled by the semi space. And that means that we've got to take along capacity; we got to stay ahead of what our customers demand forecast looks like, we have to get more generator variants into the market.
Remember, this generator is a platform, it's not a singularity. And when I say platform, in the industry, we have power and we have frequency domains that we must be able to operate in. There is no one size fits all, and so, there will be multiple variants that we'll be launching during the course of this year and next year. So, it's going to be a continuous wave of products in this RF generator category.
So, our next variants will also go into beta testing in 2022. I already mentioned we're going to expand our market share in the RF matchbox space, that's an opportunity for us, and we think that we can do that quite successfully. And we want to maintain our vacuum capacitor share. We're sitting at in that 70% to 80% market share range. So, this is a protect that domain in the future.
And as Lisa just mentioned, and as I've mentioned as well, we have to make sure that we ramp this Penang factory. So, we expect that the factory will be filled by to nearly 60% by the end of 2022. Again, it was filled at about 20% in 2021, so 60% in 2022, we'll start to see the benefits in a real meaningful way in the cost of goods sold side of the equation.
In IXS, we've got to continue that transformation. I've mentioned it, Lisa has mentioned it. You know, look, the performance of that division improved quite significantly, but it's not there yet. So, we still got another year or two of progress that we need to make. And that means we need to be dead nuts focused on the semi space. We need to move the product lines in that direction. We still need to take a few more products out of our portfolio. We need to get on one software platform. We need to reduce our cost structure, not in any sort of lay off situation. That's not what I mean. But we need to reduce our overall cost structure. For example, we still use an inordinate amount of representatives and agents in the industry to go to market. Well, that comes at a very high cost. Hence, while we're trying to get more direct boots on the ground in our served available markets [indiscernible] (00:45:48).
And so we're going to invest in that semi space and we're going to invest in new products in that semi space. And we are going to reap what we can as a cash cow of the automotive and the aerospace sector. And then in IXM, just grow share in our markets with the new products we mentioned. We've already mentioned a massive focus in the Ion products. We need to continue that ramp. We're going to invest in further products for the semi space, particularly from that items that are used at the sub-10 nanometer design node. That's going to be important for the IXM business. And IXM is also going to start investing further into our presence in Asia.
Which kind of gives you the idea of my previous two slides. Of course, I'm very bullish about what's going to happen in 2022 with one dot, dot, dot point that I need to make sure that I acknowledge. And that dot, dot, dot is a geopolitical situation, do drive uncertainties. And the Ukraine situation, in particular, is clearly disturbing. Right now, today, the impact on our business is very negligible.
At this point, we have very little revenue risk and when I say very little, it's, I mean, really little. And at the same time, our supply chain, so far, we have not seen anything in our supply chain to give us concern. Of course, that could change tomorrow or the day after. We've taken these accounts into our guidance. We've taken our supply chain challenges that were already pre-existing to come up with the guidance you see here of CHF 570 million to CHF 610 million in 2022. And I would say that that is well on line with what our overall strategy would indicate that we were trying to accomplish.
I think Serge is going to ultimately ask me a question, well, what's the upside to that? And there is upside. Of course, I'll admit that. But there's also downside to this as well. And we've tried to be right through the middle and tell you what we feel at the moment in this time. And our EBITDA margin 21% to 23%. We're going to continue to invest, as Lisa mentioned, in the business. Infrastructure is going to be important to us, new products is important, capacity is important. We're going to take on inventory to make sure that we can manage the demand side from our customers. So, that kind of gives you a flavor for how our EBITDA, we've tried to be quite careful about what we project our EBITDA performance to be.
So, I think our focus really is on growth. We have to, yes, of course, improve our efficiencies overall and we will continue to do so. And of course, we want to continue to invest in our people, in our culture. So, I would say we've got to be steady as she goes. And I think the last bullet on to that growth and efficiency and culture, we have to, as a company, continue on a path to become an employer that's attractive to new employees coming.
This is going to be a problem for the entire industry, it's a problem for Comet as well. We need to be able to attract talent to our company disproportionately, to the guys that are up the road from here, like [ph] VAT or the Infracon or the Fibers (00:49:30) or whoever it is that are out there. We need to get more talent than they do. And so, we need to be focused on gathering that in the industry.
So, we're going to be really focusing on attracting and recruiting skilled workforce. We are going to be really clear about university, for example, university relationships, etcetera, we have to go and farm that for ourselves. It's not going to come to us. We are going to have to manage the supply chain irrespective of the conflict that's going on right now, we will be facing a situation very similar to 2021 that we're going to have to manage our supply chain prudently through the entire 2022. And in some cases, I think, maybe even into 2023.
Now I know people were already talking about a second half recovery in the supply chain, again disregarding Ukraine. People are saying maybe second half of 2022, there's a recovery. Well, I hope with some, their mouth to the lord above, because I personally believe that it's probably going to be a whole 2022 period where we have to manage our supply chain and manage them very, very closely.
And then we are going to have to mitigate energy costs, rising costs in our supply chain as well, logistics costs, so far, we've been able to prudently and fairly pass those costs on to our customers. And they've been able to pass those costs on to their customers as well. It's a well-known phenomenon, but at the same time, I will say we are not trying to raise our prices in an extortionate way at all. So, we're trying to be quite careful about how we thread that needle. All right?
So, that gives you an idea what our guidance looks like at the moment. Again, I want to say thanks to you all for your interest in the company and the interest as shareholders, thank you for supporting us and thanks to our customers and our employees as well.
And with that, I'm going to go ahead and open it up for questions. I know we've gone a little bit long, but happy to take as many questions as anybody would like to ask. Okay. I'll go sit. I'll try to sit down.
Thanks a lot, Kevin, Lisa, for all your explanation. And I'm sure that you have a lot of questions now. As we have somebody – a few colleagues on the phone, so please wait with your questions until you got the microphone from [ph] Ines or Cornelia (00:52:11), my two colleagues, so that everybody can hear it on the phone. Are we ready on the phone?
Okay. So, the first question is from [ph] Michael. Michael (00:52:24), please.
Thank you. Is this working? Yes. Thank you. Two questions, actually. You mentioned the importance of direct sales and service in Taiwan in the semi industry. And I was wondering if semiconductor production gets more geographically diversified around the world, more regionalized, nationalized. How will you service your customer? How are you preparing to get that direct service in sort of the changing environment in semi? And I'll ask the second one.
Okay. Thank you, [ph] Michael (00:53:07). First of all, it's absolutely clear that nationalization is going to occur in the semiconductor space. There's no doubt about that. Our situation as Comet is that regionally we're very, very well-positioned direct in Europe, quite well-positioned. So, I don't see that as an issue. And, of course, our biggest development area for PCT is in the West Coast of the United States. So, quite well-positioned for the new fabs that were just recently announced going into play in North America.
We're going to have to continue to expand our footprint in Asia. And what I mean by that is we're going to have to continue to put more people, sales and service on the ground in Taiwan. We're going to have to do the same thing in Korea. We do have a development center and an applications development center in Korea already. But we actually don't have the sales and service team in place in Korea as well. So, we're going to need to do that.
In China, we are kind of a mixed. We're a mixed business model there. We do use quite a few reps and agents with a core of our own employees with boots on the ground. We're going to expand. We're going to invest in that so that we become less reliant on the agents that we have there. And that intimacy is extremely important. Our customers need to have a direct interchange with somebody that carries a Comet business card. It gives them a degree of comfort. It gives them a great degree of satisfaction. And it lets them know they're dealing with the entity and not with a third party to get to us. So, I think it's quite crucial. It will require more than maybe the business model of Comet has been in the past because we will have to become more geographically diverse. But we're going to go do that, and it's the right thing to do anyway as a company that's growing in the way we are.
Thank you. And the second question is on IXS, the order you got from TSMC for the advanced packaging. Is it an in line or at line application and is it a systematic testing of every product or – and what's the pipeline looking like for that kind of business?
Yeah. Great. Thank you for that question as well. So just to be clear, I said the world's largest foundry. I don't think I said the [ph] T (00:55:48) company, but you're probably right. No, you're right. The situation there is that it's offline – it's being used for offline testing, so it's mostly used for failure analysis and for quality assurance purposes. And what that means is this is for this particular customer to prove out their process flows.
I've sort of said this a bit repeatedly, and I'll bore you guys with this, but I think in the future, it will evolve into an at line test protocol that the industry follows. But in in line test, meaning, every single wafer or every set of package devices being inspected using X-ray, every wafer day in, day out, 24 hours a day, 40 wafers an hour. I struggle to see the ability to actually solve that physics problem at that rate. I mean, you're talking about being able to put a test article into a product, whether it's from Comet or from somebody else, put it into that X-ray platform and have it settle because [ph] we're moving (00:57:10) granite, thousands of pounds of granite that has to step and settle, and then actually do an X-ray. And to do that in 6 seconds, that's what you would have to be able to do.
And right now the industry would struggle with being able to solve that that physics problem. But doing it in an at-line mode, meaning an AQL level, an acceptance quality level of testing where you're testing x number of articles every 20 minutes, maybe 6 minutes in that range. That probably becomes quite interesting.
Our view right now in our business plan, in our model, we've only said, our model online. So, that can kind of give you the idea that we're being conservative because there is a challenge that we need to go and address. And the way we may be able to address that 6 minute or 6 to 20 minute inspection challenge is with our acquisition of ORS, optical research systems. And for those of you that aren't familiar with that, this is a part of our company now that specializes in artificial intelligence and machine learning, where you can imagine taking a blurry image via X-ray, and because of the learning that's occurred, you can actually make a reasoned decision that that's a known good device or a known bad device without having a perfect picture.
That's exactly what happens in the CT space in the medical sector, for example. That's exactly what happened in some of the automotive inspection arena as well. So, the proof points of that are there. It's what happens in optical inspection in the semi space already. So, it's not a leap of faith to get to that point. But we're probably a couple of years away from that, [ph] Michael (00:59:25).
Right. So, the sales pipeline?
So, the sales pipeline, again, remember, this is a failure analysis and quality assurance adaptation right now. The overall served available market for this by 2025 is somewhere in that 100, plus or minus 150 systems in that range. So, it's double handfuls of tools that are being sold for this application today in our pipeline. In our pipeline, we have quoted to some seven or eight different customers with multiple systems. So, we think we're right in the mix of it and in very good shape. Okay?
Thank you, [ph] Michael (01:00:20). May I also ask you to state your name and company so that the audience on the phone knows who's talking. Serge next, please.
Yes. Good morning. Congrats on result. Yes, my name is Serge. Serge Rotzer from Credit Suisse. I have many questions, but I will try to focus on a few ones. The first is you mentioned the order book, that your order book is full with orders you got almost two years ago. So, can you share with us how much of the order book is covering your sales guidance already to get a little bit of the visibility you have? That would be question one.
Great. Thank you, Serge. Let me clarify because I probably didn't – either I said it too fast or I didn't say it clearly enough. The order book that I was referring to specifically was related to the Industrial X-Ray Systems business IXS. And in terms of what percentage of our order book for 2022 does that cover, I would tell you that it's substantially more than half, without giving you the specificity, if you don't mind, because that – it becomes a bit competitive when we talk about it. So, for IXS, it's quite a long range view of what's happening in the business.
Overall, our book-to-bill for 2021 was in excess of 1, which gives you a good idea that all of the businesses are in good shape and are scheduled to grow.
Okay. This is very helpful. Thank you so much. Then I will move to the sales guidance. This implies growth will be in 11% to 19% if I'm not wrong, I think this is a fair guidance at the point of time. But it's a wide range as well, like others do – other companies do the same currently. But can you share your thoughts with us? What is the 11% growth and what is the 19% growth? What are the triggers or what are the downsides when we talk about 11% and 19%?
Yeah. Maybe I'll say a few points on that, and then I'll ask Lisa if I've missed anything and, because I probably will. On the downside, first of all, the downside situation, we think that we've bottomed that to at least from what we can see right now, it's really what we see as our low probability. We've taken into consideration a probability that this supply chain challenge is going to continue irrespective of the Ukraine situation. So, the down side would mean it could get worse. But nobody can forecast that right now.
And as I mentioned earlier, we don't see a sales problem at this point. We have very little exposure. And to give you a color on that, it's CHF 1 million to CHF 1.5 million. It's very minimal from a company perspective. And our supply chain situation seems to be okay relative to the Ukraine situation right now. But it could worsen. So, we've tried to take into account what could be the worst case scenario as we understand it that we experienced during 2021 for the recovery of everything else that was happening in the supply chain.
A further downside on that would be, can our major customers in the semi space continue to deliver because of their supply chain risks? And that's a hard one for us to really predict at the moment because the mantra in the industry has always been copy exact, no changes. And as a result, you become monolithic in your view. And you have some companies like my former employer that they've got a perfectly optimized operations, perfectly optimized. Any bumps, they can't react to it and the supply chain challenges or bumps. So, then they have to go through looking at alternative components and alternative suppliers even.
But that violates their copy exact protocol. So, in our case, we have been really way ahead of the game looking at new components, alternate components from different suppliers or new designs to go into a product, even to the point where we're looking at also different geographical regions and we're buying a bunch parts to protect the supply chain. And we've been a little bit faster than some of our bigger customers. They're getting there. So there could be a lead lag situation, and what I mean by that is you could see us a little bit more back ended loaded than front end loaded first half to second half. But we have to go manage that.
So, I hope that gives you the flavor on the downside. I think that we've been prudently cautious to talk about where we think the downside is. And similarly, upside, there is more there. However, we have been – we've taken into consideration as well what our customers are saying and what they've shown us in their ability to ramp, and that sort of gives us what we think is the top-line potential as it stands today. If the supply chain does improve in the second half, the supply chain, I mean, the worldwide supply chain for our customers and their suppliers, not just ours. If that really happens in the second half, like some people believe, that's upside. That's where our upside comes from.
Okay. Thank you so much. Probably, a last one, if I may. Then on the supply chain question for Lisa probably. When did you notice the impact in accounting from the supply chain – inventory, you had working down and then really had negative impact on the margin? When did this start last year, what time?
I mean, I think as we've said, we've been managing the supply chain diligently all year long. So it was something that we noticed, obviously, in the first half of last year. We baked it in to the guidance for the second half of the year. I think there's a few factors from our perspective that we were able to leverage to achieve, honestly, the gross margin growth that we did. So, most of that gross margin expansion did come from increased volumes. But at the same time, there is a portion of that that did come from operational efficiencies. So, we were able to get the factories operating more efficiently, specifically in Flamatt. We were able to ramp Penang up to 20%. So, those are good things for us. But then obviously, we were dealing with what everyone else is dealing which is higher labor costs, higher raw materials, some longer lead times.
Now, on the flip side of that, we were able to also work with customers to push through some price increases. Majority of those will flow through in 2022. We didn't necessarily see them flow into the second half of 2021.
Yeah. One more point to that, if you don't mind, is that the overall exposure for us last year and going into this year with the cost increase that our supply chain has given us to this point, net-net-net, it's on the order of 0.5%. And with the efficiencies that we're talking about and with the improved mix that Lisa just mentioned, we've been able to offset that with a very good degree of headroom.
Okay. Great. Happy to hand over to the next client.
Well, how about [ph] Harold (01:08:32) in the back first and then [indiscernible] (01:08:33)
Yes. Gentlemen in the back. [ph] Mark (01:08:41), I believe.
Should be open.
Hello. It's [indiscernible] (01:08:44). Basically, two, I would say, broader topics. First one is the IHS forecast on automotive. In the past, they were mostly too upbeat, and I was just simply wondering what from the midpoint of your guidance, if now automotive production turns out to be zero? What broad impact would that be?
And the second one is, yeah, Ukraine, Russia. What is your gut feeling? What are your customers thinking? What could the magnitude be and how long could this situation last? I mean, we are hearing that drivers, truck drivers are heading to Ukraine, missing on the market, [ph] not (01:09:27) impacting logistics clearly, and then probably also a [indiscernible] (01:09:33) inflation, I mean, the risk meanwhile tilted toward – to the upside. What is your broad assumption of the inflation for your guidance? Thank you.
Thank you. Thanks for the question. I'll take the first two, and I'll ask Lisa to comment on the inflation side of things. First of all, on – gosh, I got to remember the order of the questions again.
Automotive first.
What's that?
Automotive.
Automotive. Oh. Yeah. The automotive sector. The impact of if it's a 0% growth, just flat relative. And at 9% is what IHS sits right now, what's the impact to our overall guidance. And to be frank, it's quite low, very low. I would say it doesn't impact our lower end of our guidance in any way whatsoever. Second one?
Second was your...
The conflict...
...gut feeling on Russia and Ukraine.
The conflict with – thank you. The conflict with Russia and the Ukraine situation. That's a hard one. That's a really a hard one to address. And let me just – we got to look at the mosaic of what, in particular, the semiconductor industry, how it sits. Many of the raw and rare earth materials come from Russia. For example, palladium is there 40% of the world's entire supply is coming from Russia. And every single electronic device in the world has palladium in it. So, there could be a knock-on effect not directly to my customers and my customers' customers, but at the next level up there could be an impact there, right? So, it becomes a food chain phenomena. In the meantime, you can see in South America or even Latin America and in China and [indiscernible] (01:11:30) exact material they are already starting to ramp production. So, it might be a cost impact that trickles down through. But it looks like supply/demand would probably be okay.
On the other hand, there's so many things you could look at. You can look at neon. Neon is a sourced material heavily from Russia. You can also look at aluminum and stainless steel, particularly 316L. All of those are heavily turned down industrially by Russia. So, honestly, it's an unknown. I don't – how long will it last? It comes down to where we have a treaty, where we're not. It could be just a minor perturbation. We're planning as if our plan at this point today is that we know what our top line looks like. We know what the impact currently today on our supply chain looks like. We've looked at the N minus 2 level. At that level in our supply chain also looks fun today. So, we think that we've taken the prudent view today about what the conflict is going to orient itself. So, I'm sure that doesn't really help to answer your question, but that's how I – it's the only way I can answer at this point.
Yeah. Thank you. I mean, also a psychological question, how end consumers demand now might [indiscernible] (01:13:10) due to the fear of spreading of the conflict of course?
Yeah. That is a possibility. I think that honestly in some respects, the semiconductor industry as an example right now currently is kind of going hum, it's sort of like, hmm, the pandemic. Remember, it was an incredible growth year through the years, through the pandemic, because societal demands are insatiable right now. And so, mostly the industry right now is kind of saying, hmm, well, look you have to go figure out how to deal with it, okay.
My gut feel, this is Kevin Crofton, and not Kevin Crofton, CEO of Comet. My gut feel is that we'll find a way to manage through it and the businesses will be – likely to be okay, unless this spread into a worldwide conflict. And then it's a different story.
Okay. Thank you.
Okay, then we have, Michael.
Yeah. Thanks very much. It's Michael from Stifel. I have two questions for Kevin, and one for Lisa, if I may. So, on the supply chain, we're always talking about supply chain issues. But I was just wondering, what's the – which parts are really missing at your end clients that they cannot deliver their tools or their machines? Because what – if I'm not completely wrong, VAT suggested yesterday that it's actually power tools, there's a shortage in power tools. So, assuming some of your competitors are not really able to deliver, which leads me actually to the second question for Kevin. Were you able to sell your Synertia generator because you were actually able to deliver it or were you able to sell it because there is something that you do better that you can maybe now explain to us because before, you couldn't do that? So, these are my two questions for you.
And, the one for Lisa, probably, also answer it right now. So, I was trying to do a little bit of maths here on my notebook and I'm not the best in math, actually, but when I just make a quick calculation, the lower end of your EBITDA margin guidance, assuming that the IXS margin, which I think is a little bit low actually in 2021, would just go up, let's say, 200 basis points and the rest will stay more or less stable, not even taking into account the Penang factory, the cost initiatives that you have, I'm not getting to the 2021, I'm already getting more than 2021. So, maybe you can just elaborate a little bit...
I appreciate your optimism.
...maybe if you could just elaborate a little bit how conservative you really are on the margin side, not on the top line. But just on the margin side, it doesn't really add up, in my opinion.
All right. Why don't I take the margin question first and then we can go back to supply chain? So, I mean, I think when we put out the guidance for the year, we are trying to give a 12-month outlook, factoring in a lot of different things. So, I mean, I think to go back maybe to the sales discussion because that's really a large focus for us. So we're seeing the demand coming from the customers. Our order backlog at the end of the year was roughly 50% higher than it was at the end of 2020.
And so, I think from that perspective, we feel good about the demand that's coming in. We also feel good about where we're able to produce. I think we've done quite a good job in terms of making sure that we have the capacity to meet the demand in the short-term. Obviously, I think we need to ramp-up where we're spending from a CapEx side to make sure that we're ramping capacity for where we need to go to 2025. But at the same time, the supply chain constraints are persistent. The other thing that – and we talked about supply chain, but we also need to put labor into that as well. So there are price increases on the cost of labor. We need to make sure that we are retaining labor that we are attracting labor to meet the goals that we have.
So I think that just gives a little bit of color around the sales guide. And then, at the same time, on the profit side associated with all the factors I just explained with the input costs, and obviously, we're still continuing to work with select customers on pushing through price increases. And we've taken a view on that into the margin numbers as well. I think the final thing, though, to say on the margin and I referenced it in my prepared remarks, but we are investing in the company and we are investing in digitalization efforts and we're investing in cybersecurity and some of the things that we need to do to make sure that we are creating a scalable organization to meet our goals going into 2025 and into the future.
So that's my view on how we thought about margin and what the guide looks like for 2022, since the supply chain...
Okay. I'll move to – I'll take your question on supply chain and impacts. I think I held, Michael, some of his slides at some point for his presentation. Look, the situation, if you look at the major subsystems that go into a plasma, a plasma piece of capital equipment. There's, of course, VATs product lines. There's typically turbo pumps and other types of roughing pumps from Pfeiffer and companies like that. And then you have the RF power subsystem, et cetera, et cetera, et cetera.
The biggest problem for our primary customers is the availability of RF power control systems. That's the issue. And if you were to look at my – our biggest competitors, they're quite – well, of course, advanced energy and MKS. They've been very clear in their results that they've reported multiple quarters that they are having trouble to produce. Their supply chain is letting them down. And as a result, there have been missed opportunities for revenue. And, of course, that then has a – gives a problem to the large Tier 1s, okay, for sure. And so that's a pacing item. There are other pacing subcomponents, but that's the primary system.
In our case, you asked specifically were we able to capture RF generator opportunities? I think as a way to interpret your question, Michael. And I would say no. But I would say on the RF matchbox perspective, the answer is yes. And the reason why that's the case is that we're well-known as a provider of RF matchbox assemblies. We're qualified across, most of the Tier 1s and Tier 2s with RF matchboxes. And so we're able to step in and take positions that maybe our competitors couldn't fulfill. The generator is a different story, and the reason why that's different is, particularly in the Tier 1s, they have to go and qualify a generator, not just on their product, but then they have to qualify that generator as part of their overall piece of capital equipment with the TSMC's and the Samsung's and the Intel's of the world. And that's not the work of a moment. So even more of my biggest competitors are not able to supply a generator that is form fit function that we can fit, no chances in this timeframe. There's no chance that we would be qualified that quickly.
We have had a situation that come up where one of those very large Tier 1s have said, we need to go qualify your product, in anger. But that's going to take time. But before that, it was like, oh yeah, we'll get to you. Sometime, we'll talk to you. But now it's become [indiscernible] (01:21:55) so that's – but that's going to take us time to be fully qualified in a Tier 1. Does that answer your question?
Yes. Perfect. Thank you very much.
Thank you, Michael. Do we have one more question in the room? Two more questions, first. [indiscernible]
(01:22:13). A couple of questions on the RF generator business. You said your estimate first sales in 2022. So could you give us a ballpark figure of what kind of sales you expect this year? And then, you said addressable market is CHF 1.2 billion, do you have an estimate what market share you can get in the midterm in this market and will it be more of Tier 1 or Tier 2 suppliers?
Gosh. That's a big question. Okay. First of all, I will defer about telling you what our revenue line for 2022 is going to be for this generator, and that's highly competitive information, first of all. And to give you an idea of why we're so careful about divulging that at this point, we'd rather talk about design wins and first customers. And the reason is because our two competitors that I've already mentioned, they've got boots on the ground everywhere in the world. They want to find out where every single beta site tests we have going on is occurring and think about what their reaction in the marketplace would be if they knew exactly what product at which customers are being qualified on. They would go to that customer right away at the highest level of management.
And they'll say, why are you entertaining those guys from Switzerland? What did we do to not satisfy you? How do we make it better? Can we reduce price? Can we – maybe we need to give you more people, maybe we need to give you spares? They can act like a gorilla in the marketplace, at least, that's what I would do. So, I would do everything I could to prevent a Comet or [ph] A (01:24:05) another to come into my customer because that's my customer. So, that's highly competitive for us to actually divulge that.
But I'll try to give you some flavor. We've been very clear about saying we'll get revenue in 2022. We'll get some more revenue in 2023. It'll be interesting revenue in 2023. But then, you'll start to see a significant uptick in 2024 and 2025. As long as the product does what we say it's going to do, right? And we're still in that phase where the baby has no words. It looks really good, it's going to be, prince charming when it grows up. We're still in that phase right now. But looks like it works, it looks like it does what we say it's going to do on the TAM for really one power regime and one frequency regime, so far so good.
As long as the other variants do the same thing, then our stated objective as a company is that we will take 10% market share by 2025. And I've been quite clear that I believe that's a very humble objective. Because if the product does in every variant, if it does what we say it's going to do, by 2025, we should have a shot at being – at least number three in this space. So, again, so you're talking about – we're talking about a $1.1 billion to $1.3 billion served available market in 2025. And we've been very clear about stating our objective is to be at 10% share in that timeframe. Okay. It's going to be in that range. And that would be a very major success for the company.
Okay. Thank you. And then one question on the CapEx, you said that you're expecting CapEx to be at the upper end of the 3% to 5% range. Can you give us an indication of the split between the three divisions?
I can give you. Yeah. Sure. I can give you a kind of an indication of where that CapEx will be directed. So, the majority of that CapEx is related to capacity expansion and R&D expansion. It will be in Flamatt, Switzerland. Part of it could be in San Jose, California. A minor part of it will be directed towards Penang. And then, of course, Aachen is where we have – Aachen, Germany is where we had planned to produce this inertia RF generator. So – but the majority of the CapEx is really around capacity expansion, R&D expansion. It will be disseminated globally. The majority of our CapEx is in the Plasma Control Technologies division. It's our largest division. It's where many of our strategic aspirations are at the moment, especially in the mid to the long term. So, that's how I put a flavor around the CapEx. And the other thing is really, again, we're investing in digitalization. And that includes in operations and so part of the CapEx is related to those activities.
Very good. Thank you.
Sebastian?
Okay. Sebastian Vogel from UBS. Perfect. Many thanks. I got three questions. The first one would be on Penang. Can you sort of give an indication or a rough indication of ballpark figure, how much of a margin help that was already in PCT for this year to have a little bit of a better sense what is the potential going forward?
And the other one would be on the RF generator. Just to be clear there, is that just mean one single generator that has been sold in these orders or there is a couple of machines been included in there? And is the delivery supposed to be happening next week, tomorrow or in two, three months' time down the road? Just have a little bit of a more of a sense how quickly that will turn into sales.
And then a bit of a housekeeping question. Could you share with us the FX impact on the sales number for the different segments? That would be great.
Okay. So you handle FX and – what was the first part of your question?
Can you repeat the first part of your margin question?
Yeah. Sure. I mean, since you have said that you have already mass production to Penang, so the question is just like what is the margin support that you have seen in PCT already from this transfer?
So, if you're ready...
Yeah. I can start...
...go ahead.
...I got to look at the sales number, but I know it's in the Appendix. So, on the margin side, again, just to kind of repeat back what we have seen happened in the second half, so the major thing here with Penang is that we did ramp it up to about 20% this year. And so, that was on schedule; it's on plan and it did what we needed it to do. Again, remember that we're transitioning from manufacturing of our matchboxes from San Jose to Penang. So, the real lift from that is going to come 2022 and then into the out years.
In the second half of 2021, we also needed to compensate for increases in labor, raw materials, components, etcetera. So, just in terms of where did our margin expansion really come from, in 2021, it was generated from volume and a favorable product mix. And as I did say, a portion of that gross margin expansion did come from operational efficiencies. But the lion's share of that was really coming from volume. But going into 2022, the ramp up for Penang should be around to 60% and that we should be seeing an appreciable increase in gross margin from that.
Why don't you take the next one just because I need to check the actual number on the FX side?
Yeah. So, one last comment on that. The summary of that answer primarily is that Penang was a volume increase situation that we're trying to get it filled. But the overall impact on cost of goods sold is pretty, pretty small relative to the opportunity, quite small to the tune of, 1 million, plus or minus. If you get to 60% capacity fill, it would be substantially more than that. And that's what our plan has always been, by the way, Sebastian. So thanks for that question.
The second part of your question about the RF generator, I hope you all don't laugh at me, but remember I said that we would sell one in 2021. We didn't quite get there. We sold one a couple of weeks ago. And so, so just to be dead nuts, straight down the line here, there will be repeat orders from that customer, for sure. I want to – I don't want to go into the specifics of that, if you don't mind. We have five ongoing data sites already for that variant already, as I've previously announced. We expect will convert a significant portion of that into revenue and into extended purchase orders for the year.
And by the way, that first unit, yes, it's shipped. Yes, it's there. Yes, it's at the customer. Yes, it's real. Sorry, I forgot that part of your question. The – and then, we have an objective to have another handful or more beta sites going on mid-year, so they'll be carrying on through the course of the year. Can convert some of those into revenue? I would say between the ongoing beta sites we have plus the new beta sites that we have coming, there's probably the likelihood that we'll convert something smaller than a handful of those into actual repeat orders, it's just because of the amount of time that it takes to get qualified. Yeah. Hopefully that answers your question.
And then circling back on the foreign exchange, the impact on sales year-over-year 2020 to 2021 was CHF 5 million.
And what's the split between the two segments?
So, I don't have it by the split of segments, but the way to think about it is that the majority of our exposure is coming from US dollars, and that is mostly with the PCT customer.
Got it. Many thanks.
Thanks, Sebastian.
Thank you, Sebastian. So, we're already running a little bit behind schedule. So, if there is no urgent question in the room right now, then I would ask, and we'll come back to you. After that, I would ask if there is one or two question coming from the phone. Do we have something there, operator?
There are no questions registered at this time.
Okay. Perfect. And we have another question in the room. [indiscernible]
(01:33:45). Just a tiny question is in reference to design wins. If you win the design, does it mean you get the order? Or how does that work?
Okay. So, the question is, if I – if we get – when we say we get a design win, do you get an order from it right away? The answer is yes. Typically, what that means is you'll get a first set of orders for depending on the product that it's going on, right? Our customers product, it'll be, some 10s of RF matchboxes. It'll very rarely get 100 units because nominally, you're getting qualified on either a new product from our customers or a new variant from our customers or you're in a situation where you are replacing an incumbent.
So, you're getting part of what they are already delivering, not all of it. So, it's typically in the 10s for the first orders that you're going to get. After that, if it's on the right product at your customer, the right end product, I mean, look, our biggest customer, in one of their product ranges, they're supplying 500 modules per quarter. Okay, that's at least 500 RF generators per module going out the door, so it could be substantial order, or it could be with a little tiny customer that maybe their entire production for the entire year is 200 modules, depending on the customer mix, customer position.
Do you pay the design?
Yes. Under normal circumstances, we do all of the design work, we do all of the – so, we do all the engineering, we do all the design for manufacturing as well as the product engineering. And it's a wholly sold article from Comet. There are circumstances where we do build to print, but nominally, what ends up happening is it becomes billed to print for the first units. Then we do design upgrade on behalf of the customer and then, it becomes a Comet design to deliver. So, that's a transition that occurs.
Thank you.
Thank you for the question, [ph] Daniel (01:36:30).
Do we have a final question in the room? [indiscernible] (01:36:36).
Sorry. If I may, a final question for me. On IXS, I was not sure. You mentioned that you see some competitive headwinds in IXS. Can you – what is wrong if I understand this not correctly. Then on IXS, if this is not true, you showed a roadmap. You want to achieve 2025 initiatives or something like that. Can you give us a feeling how much you already have achieved of this roadmap and what we can expect for this or then even later from that and...
Okay.
Yeah. That's it.
All right. Thanks for that question. If I said headwinds, I don't remember saying that to be honest. You caught me off guard on that one. Maybe you can whisper to me and tell me when did I say that. On the – let's talk about the IXS transformation. Maybe to try and put that into a broader context and narrow down to where are we headed. When I came on board, we had 26 different products, 13 of which were single one-off custom designed systems that were literally being sold one. And then three or four or five years later, you'd sell one. And then there were maybe – so there were 13 of those. And then there were another 13 or 14 that were standard products that had quite low margin. I want to tell you the ease conditions. So, that was the ease condition. We also will – each of those products, those 26 things that we're selling, we're on four different software platforms.
Now, how does a small company have four different platforms, software platforms and being able to support that as an entity? That's like having some of your products on a Dell computer and some of them on a Macintosh, as an example. They don't work the same, right? We also had 300 agents, distributors and representatives. Many of them were historical from the Phillips days. Probably you all know this division was formerly part of Phillips, and so the contract had – that Phillips had put in place carried on through that period. And you kind of go, why is that important? Well, they were contracts that were not to the benefit, maybe at the time they were, but in today's day and age, the commission structure, the service structure, it was not what you would expect in a capital equipment company that is in the semiconductor market. Wasn't fit for purpose?
So those are maybe some three examples of what the ease condition was a year-and-a-half ago. We're down to – we're down to the point now where we have six products that are actually standardized and real and we can produce them repeatedly. We still have two custom products that we're still delivering and still building. We are on two software platforms. And we have a little bit over 50 reps, distributors and agents. And where we're headed is that we want to get to a point where we're probably going to have seven products.
And we're probably still going to have one custom product that we're going to deliver for a period of time, because of the nature of the customer and the nature of the industry that we're in, in that particular case. By 2025, we should be on one single platform from a software perspective, one. And we'll have something less than 50 partners in the channel.
So, we're on that and then I should have said, remember, I said we'll go from six to seven, we might go from six to eight new products, because you can imagine that we might have a semi-only product, and electronics-only product. Currently, today, we think it might be that one additional product will cover both sector demands. But you can envision maybe that's not going to be right, because that comes back to Michael's question, is it going to be online at line or a one-off sort of test system. And that would be a different architecture.
So, where are we in that journey? Okay. We've done the – we've done the sort of easy part, sort of. And now we need to get through this design and industrialization activity. And we probably have another year to year and a half to go in this transformation. So, 2022 for IXS, yes, it's is going to be better. And I hope that all of you all are believers. I remember coming into these forums and there weren't that many believers, but hopefully we've changed that. But it's going to be – we got work to do. But I've lived it a couple of times and I'm sure we can make that happen. Hopefully, that helps you.
Great, so thank you. Thank you very much for your lively participation in the event. We can close the official part of the event right now. Thank you for showing up here. Thank you also to the audience that joined us over the phone. After the meeting and here will have served some finger food at the back of the room and management, Kevin, Lisa will also be available for you if you have one or more questions. Also, thank to – I would not miss that to [indiscernible] (01:42:55), who organized the event, including the food you're getting after that and the drinks.
So thanks for coming, Zurich here, and I hope you stay a while to have a conversation with our management team. Thanks a lot.
Thanks everybody.
And see you soon.
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