Inficon Holding AG

SIX:IFCN

Earnings Call Transcript 2021-Q3

[Bernhard Schweizer]

Hello, everyone. It's 09:30, and I think it's about time that we begin. My name is Bernhard Schweizer, Investor Relations contact at INFICON, and I have the pleasure to host this Microsoft Teams session.Thank you for joining the INFICON web conference on its third quarter 2021 results. With us today are Lukas Winkler, CEO of INFICON; and Matthias Troendle, CFO of INFICON. The management team will first present the results and then take questions. During management's prepared remarks, participants are kindly asked to turn the microphones and cameras off.You should have received by now the press release on the Q3 results, together with the links to the accompanying visuals for this web conference. All these documents are available for download in the Investor section of the INFICON website, www.inficon.com. [Operator Instructions] I would like to inform you that we record this web conference to archive the audio file later on the INFICON website.The oral statements made by INFICON during this MST session may contain forward-looking statements that do not relate solely to historical or current facts. These forward-looking statements are based on the current plans and expectations of our management and are subject to a number of uncertainties and risks that could significantly affect our current plans and expectations as well as future results of operations and financial condition.We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.Having said all that, I would like to hand over now to Lukas Winkler. Lukas, please.

[Lukas Winkler, President & CEO]

Thank you, Bernhard. Good morning, everyone. Thanks for joining us today to review our results for the third quarter of 2021. A year ago, we had to announce one of our worst quarters for many years. Now, 12 months later, despite the COVID-19 pandemic, the situation changed completely.The demand for INFICON products is above our capacity. The global supply chain is overheating, and the geopolitical situation, especially the U.S.-China conflict, makes the situation even more complicated. In total, with revenue of USD 122 million, we reached almost the record level of our second quarter 2021, just finished 3 months ago.On Slide #3, the key figures, you can see the key figures of the reporting quarter. Sales growth was almost 33%. If you deduct the impact from foreign exchange rate fluctuations and the small acquisition we made months ago, the organic growth rate was still about 30%. The book-to-bill ratio, again, far above 1. Our backlog increased to even higher record levels, something that we have never experienced before.In press release, we spent almost $6 million in the third quarter alone of overhead down the road. Over the next three [indiscernible], we will expand the capacity by approximately 50% compared to the level that we used to have in 2020. High sales volume improved gross profit margins but increased operating expenses.We finished the quarter with an operating income of USD 22 million or 18% of sales, compared to USD 10.5 million or 11.4% of sales for the same quarter a year ago. Net income reached USD 16.8 million or 13.8% of sales. Mr. Troendle will review the numbers with you in more details later. I now highlight through some important developments in our target markets upfront.On the next slide, #4, you can see the sales breakdown in our -- into our served 4 key markets as well as the regional sales trends. The pie chart shows an increased contribution from the RAC and auto as well as the General Vacuum market at the expense of a lower contribution from the Semi & Vacuum Coating market. That is only due to the base effect. A year ago, we had a low contribution for the RAC, Automotive and General Vacuum market and has in no means an indication of a weaker Semi & Vacuum coating market at all.The trend chart on the right-hand side indicates the importance and the dependency on Asian customers one more time. Almost 50% of our products and services get sold to Asia, China being by far the largest contribution, size and growth wise.Now let's do a quick analysis market by market, starting with the smallest one. On Slide #5, in Security & Energy market sales increased 12.8% year-over-year and with a 14.5% sequential decrease, reached a level of USD 5.3 million only.The security side of this market remained depressed, and we only sold a few HAPSITEs to a handful of customers. The largest potential customer, The U.S. Department of Defense, is testing our new generation of HAPSITE products, but the first large order cannot be expected before 2022. Nevertheless, we are really happy with the test results and the expanded capabilities of the new product generation. It can be used to detect narcotics like fentanyl as well as explosive besides all the traditional and nontraditional warfare agents.On the energy side of this market, we have been able to be one of the only providers for the biomethane gas applications, and we set new spend in the environmental and landfill gas methane market. For the last quarter of the year, we do not expect large changes compared to the first 3 quarters of this year.Now moving to the Refrigeration, Air Conditioning & Automotive market on Slide #6, where sales increased over 27% year-over-year, but decreased 8.3% compared to the second quarter of this year and reached USD 24.2 million. We experienced a stable Refrigeration, Air Conditioning market, a very dynamic increase in our battery testing business and the continuation of a, let's call it, a more weaker traditional auto market.Industry 4.0, digitalization and fully automatic quality inspection applications in conjunction with tighter specifications are the main drivers for the markets for refrigerator and air conditioning manufacturers. E-cars drives the need for more lithium-ion battery capacity, and the need for safer batteries drives the higher demand for quality inspection instruments, such as the new INFICON EN P3000 lithium-ion battery leak detector, around the world. We will certainly end the year 2020 on a new record level for the whole market in refrigeration and automotive applications.Now let's go to the Semi & Vacuum Coating market on Slide #7, where sales increased almost 40% year-over-year but decreased 6.6% sequentially and reached USD 59.2 million, with the major contribution coming from the semiconductor device and equipment manufacturers. All the major players in the supply chain of the chip making industry continue to invest in the latest state-of-the-art technology for analog and logic chips as well as memory chips.The China semi initiative continues, but unfortunately, U.S. trade and technology restrictions remain in place and generating revenue, especially with the chip makers such as SMIC became even more cumbersome. On the other hand side, we enjoyed a steep increase in businesses with Chinese equipment manufacturers where we have no U.S. export restrictions.The semiconductor market will remain the most attractive growth opportunity for INFICON, not just from a financial point of view but also technology-wise. If you can develop and sell products for advanced semiconductor application, then you can serve all other markets as well. We continue to work very closely with equipment manufacturers as well as device manufacturers to develop new sensors, solutions and methods to assure high-quality mass chip production.In the meantime, everybody is aware of the current supply shortages, and all prominent chip manufacturers have announced plans for new fabs, some of them supported by government incentive programs. The semi market will keep us very busy for the coming years, so 2021 will be a record semiconductor year, and we foresee also a good 2022 as well, while investments in OLED flat panel and optical coating technologies will remain flat.Finally, we had a record third quarter this year in the General Vacuum market, where you can see the results on Slide #8, with sales over USD 33 million that reflects a year-over-year increase of 29.3% and a 10.6% sequentially compared with the second quarter of 2021.Chinese customers as well as sales to our European private label distribution partners represent the majority of the growth. As you know, we sell analysis measurement and control products for many different industrial applications to private label partners, primarily vacuum pump manufacturers, but also via direct sales channels to industrial OEMs and distributors in order to reach and serve many thousands of smaller and midsized customers around the world. So 2021 will also be a very successful year in the General Vacuum market.Let me close my part of the presentation with an outlook slide, which is on #9, for the whole year 2021. Despite the uncertainty, the outcome of the COVID-19 pandemic and unfortunately, the continued China-U.S. issues, we are quite confident to reach new annual records. On inside the semiconductor, we remain very dynamic and we have to expand our capacities to keep up with the increased demand.The Vacuum Coating applications are not at record levels, but they are quite solid. The e-car trend will continue, and the need for safe energy supply systems offers plenty of growth potential. The same is true for green energy initiatives. And with a high number of newly launched products, we have paved the road for additional sales growth beyond 2021.The only concern that we have currently are constraints on the capacity side, on the supply chain side, and unfortunately, on the export license discussion that we had with the U.S. government to even reach higher revenue based on the order intake that we currently enjoy.With that, I'd like to turn over to Matthias Troendle, who will give you more details about our financial performance. Matthias, please.

[Matthias Troendle, VP & Group CFO]

Thank you, Lukas, and good morning, everyone. As usual, I will cover our Q3 results and comment our guidance for the full fiscal year. Let me begin with our revenue segmentation, which starts on Slide 11. Revenues for the third quarter of 2021 came out at $122.2 million compared with $92 million in our third quarter of last year. This represents an increase of 32.8%. Taking into account the positive currency impact of 1.8% or $1.6 million and a small contribution from acquisitions of 0.3%, we achieved an organic growth of 30.7%.Mr. Winkler has already discussed the details of the different end markets. We can highlight that similar to the second quarter, sales in all markets did grow compared to Q3 previous year. All double-digit. The Semi & Vacuum coating market did grow by nearly 40% and the General Vacuum market reached, with $33.5 million, a new quarterly high.Compared to Q2, the General Vacuum market did grow by 10.6%, while the other markets showed a decline, partially driven by supply and capacity constraints against our record numbers from quarter 2. With that, quarter 3 was -- quarter 3 of 2021 was the third quarter in a row with more than $120 million of sales.Now let's take a look to the regional composition of the total revenue. Europe reached 26%; North America, 24%; and Asia Pacific ended with 49% of total third quarter sales. Compared to Q3 previous year, we had the highest growth in Asia, with very strong 57%, followed by Europe with 16% and North America by 13%.Asia showed the strongest absolute growth in Semi & Vacuum Coating, but all other markets did grow as well, especially the Refrigeration and Air Conditioning market by strong 74%. Europe showed also an increase in sales of 16%, mainly driven by 2 end markets: General Vacuum and also in the Refrigeration and Air Conditioning market.Now let's go to Slide 13. The gross margin for the third quarter of 2021 reached 46.8% compared to 45% in the same quarter of last year. The margin percentage did increase by 184 basis points. Higher volume, good capacity utilization and the market and product mix could compensate rising material costs, partially due to shortages and broker utilization, higher transportation and customs costs.What happened on the cost side? We spent $10.8 million on R&D in Q3, an increase of 11%. As a percent of sales, the expense decreased to 8.8% in the third quarter from 10.6% in the last year. Additional headcount, higher R&D material costs, plus higher external costs related to our development efforts did drive this increase.In SG&A, selling, general and administrative, the expense level showed a $3.2 million increase to $24.4 million. New hires and performance-related costs in form of commissions, bonus and sales performance incentives did drive this increase.Foreign currency impacts have been slightly unfavorable in this quarter. As a result, for the third quarter, we had an operating profit of $22 million or 18% of sales after $10.5 million or 11.4% in Q3 of last year. This corresponds to an increase of around 109%, which means the result more than doubled.The income tax expense for the third quarter was at $4.9 million, which represents an average tax rate of 22.7%. The global tax rate is comparable to last year and the last quarter 2, nothing special, I would say. The net profit, therefore, reached $16.8 million or 13.8% in Q3. This compares to $7.9 million or 8.6% in the prior year, a 113% increase in absolute numbers. And as a consequence, we have more or less the same development in earnings per share. This went up by 112% and stands at $6.87. Now let's move to the balance sheet. Our net cash position reached $42.2 million, which is $1.3 million higher than end of last year in December and $16.5 million higher compared to the last quarter. Operating cash flow, which you can see on the bottom right, reached, with $21.9 million, a good and solid level, representing about 18% of revenue. This was approximately 40% or $6.4 million higher than last year.The inventory turns improved further, reached 3.1 turns. The DSO ratio, which represents the accounts receivable, was, with 52.1 days, pretty stable. The working capital, which consists out of AR, accounts receivables, inventories minus accounts payables, closed at $146 million, clearly higher than end of last year. The majority of that $17 million increase has contributed to a $14.8 million increase in inventory, which is driven by the obvious business growth. The balance sheet shows a solid structure as a 62% equity ratio and no long-term debt.Those were my comments on the balance sheet in Q3. Finally, let's take a look to the outlook. Mr. Winkler has already gone into the details and the assessment of our end markets. The business situation in our end markets looks quite positive for the current year. Also, the global, economic and also political situation remains somewhat fragile. We assess the outlook for the current year optimistic, therefore, we have increased again our guidance, and we expect sales of around $490 million to $510 million with an operating income margin of 18% to 20%.The last slide shows our corporate calendar and the upcoming dates. The next events will be in March next year. Early March is our Q4 and fiscal '21 conference call, and end of March, we will conduct our Annual General Meeting.With that, I would like to close the presentation, and we are, as usual, ready to take your questions.

[Bernhard Schweizer]

Thank you, Matthias. [Operator Instructions] And we do have a written question from [ Alexander Horvath ]. Let me just read that out to you.You mentioned that certain bottlenecks in sourcing and in the logistics have limited your growth and created additional cost. Could you please give us an idea in what region and revenue growth rate and earnings could have been without those limitations? And what is your assumption regarding the bottleneck? By when do you expect the sourcing and logistics bottlenecks to be relieved?

[Lukas Winkler, President & CEO]

Thank you, Bernhard. Let me take that question at least from an overall point of view. If you look at the dynamic and our intake side, we are clearly sitting on the backlog that has reached the level that we never seen before. And assuming -- and if you look at our increased lead times for certain main product lines that increased by up to 2 months more, assuming that we can go back to that kind of a lead time that we used to have, you can assume that, that [indiscernible] a little bit more than 1 month worth of our shipments.So without bottlenecks and some supply chain restrictions, probably would have had that, for the full year, would have reached a higher sales volume of, let's call it, approximately USD 50 million more, assuming no restrictions. Now on the cost side, I do not know all the details, but I think Matthias can refer to that later, how much more cost we had to incur due to the supply chain constraint.On the second part of the question, when do I expect coming out of this situation, I think you have to see it from 3 different points. One is the internal point, when are we ready to have a higher volume or higher capacity on the tool side and calibration side that you can expect by the middle of next year, it should be fully ready to shift a much higher revenue level based on the internal capacity. On the external side, on the supply side, I believe it will take a little bit long until everybody has adjusted to the higher supply chain levels.And the third pillar is the political side. There unfortunately, I do not expect a quick release of any of the U.S. trade restrictions that we currently deal with. If you -- I just want to give you maybe some practical insight to how it works. We are still waiting for one of the large order to get the export license, and we wait now for 6 months.And having said that, that's something that we had no influence on, so we simply have to wait and file an additional pile of papers to convince the authorities that what we do has no direct risks for the U.S. security level. So those are the 3 elements that I would refer to the end of the bottlenecks. And in terms of cost side, the gross profit impact, I have to refer to Matthias. He might have a little bit more meat on the bone.

[Matthias Troendle, VP & Group CFO]

To give a little flavor, when we talk about the constraints and the issues with broker costs and supply and logistics constraints, we can say that this -- the impact on the gross margin side is around 0.4% to 0.6% in quarter 3. So it's pretty substantial for us. And we try for us to optimize and improve. But our -- I would say, our sources and our power is somewhat limited, and we need to live with it and try our best.

[Bernhard Schweizer]

Okay. Thank you. We have a queue of questions. We will take them in a top-down order. I do ask now Marta Bruska to go ahead with her question. [Operator Instructions]

[Marta Kinga Bruska, Analyst]

I have a couple of questions, if I may, please. I will take them one by one. So firstly, I got a little bit confused on your R&D comment. So I think in the press release, it says some $24.4 million, while in the income statement when they go down, I see $10.8 million.So does it mean that the difference is what you capitalized? Or was that $24.4 million referring to some more quarters? Or how should I understand that, please?

[Lukas Winkler, President & CEO]

I don't know I have to refer to Matthias. I certainly can confirm that we do not capitalize any R&D costs, but that might have been a typo somewhere, but I'm not [indiscernible].

[Matthias Troendle, VP & Group CFO]

Yes, Marta. I think you have a good catch. Unfortunately, the $24.4 million is not correct. I must admit that we said the $24.4 million went into research and development, which is not the case. Sorry for that. What we said in our presentation, that's the correct number. So it's much lower.And we switched obviously, SG&A and R&D costs. Sorry for that typo or that error, and what we presented is correct. And as Lukas said, we never capitalized any major R&D activities in our books. We always expense and as we do. So there is no burden in the balance sheet. Yes.

[Marta Kinga Bruska, Analyst]

Thank you very much for the clarification. Just to be clear, it's still increased quarter-over-quarter by about $1 million or so, but -- yes. So -- and then the second question is about the outlook for 2022. Some of your broader peers, like I refer to [ BAP ], sees the market growth for the next year in low teens.Do you have any indication? It seems like it could be still relatively capacity constrained. So I heard your comment with regard to your own ramp-up road map [indiscernible] for Q2, perhaps seeing a full benefit of the new capacity increases. So how do you think of 2022?

[Lukas Winkler, President & CEO]

Let me say that again, there are 2 items that I have to mention first, and I agree with most of my peers, the market itself probably will grow some -- in the low 10%. But at the end of the day, it's also a question of how much of the backlog can we reduce during 2022? So from an order point of view, I expect the market being in the low 10s or maybe around 10%. But the more we can reduce the backlog, the higher we should about this rate in terms of revenue that we should reach in 2022. So it depends on our ability to increase capacity and also to work with, hopefully, an easier supply chain that will adapt to the higher level compared to 2021.

[Marta Kinga Bruska, Analyst]

I'm sorry, my network is really poor because of the video streaming. Can you -- and the market in low 10s and then you will be up or down versus the market from your statement?

[Lukas Winkler, President & CEO]

From a revenue point of view, we should go higher because we will reduce our backlog.

[Marta Kinga Bruska, Analyst]

Yes, yes, exactly what I expect. Okay. Just very quickly on the China. Can you give us an estimate how big it is currently and specifically for semis?And with regard to also the context of the political situation in your comments there, would there be an idea to allocate some capacities also there, when you think of adding capacities with China and a factory in China be an idea?

[Lukas Winkler, President & CEO]

Let me start with the last part. No, we are not going to add capacity in China, especially not for the semiconductor market. Our Chinese operation has been built up to utilize the good cost level in China. We use it only for, I would call it, low tech products, not for high-tech products. So the high-tech products, we will certainly keep outside of China. And regarding the political situation, I think I would be the wrong guy to really comment. I simply hope for a good outcome, but I'm not a politician. So sorry to not answer that question.And from a growth in size point of view, China will be our most important sales region this year. So it will be the #1 position, basically, bigger than the U.S. market. And I don't think it will stop that quick. And I think it's more than 50% of the growth is coming from the semiconductor market now in China, which has been close to 0, let's say, 5 to 10 years ago. Now it's already 50% of the exposure.And then the second largest part is coming from Refrigeration and Automotive, especially the lithium-ion factory manufacturers and also very nice the General Vacuum market has been a very positive for us as well. So China certainly will represent roughly, if I look in the next 2 to 3 years, probably more than 25% of our potential revenue. And it will be dominated by semiconductor and automotive, especially battery activities in China.

[Bernhard Schweizer]

Okay. Then the next person to have raised his hand is Jörn, Jörn Iffert. [Operator Instructions]

[Jörn Iffert, Director & Analyst]

The first question would be, please, on the semi market again. I mean, in terms of fab builds, in terms of product innovations on your customer side, I know it's early, but can you give us an idea what you see also for '23, '24 or what is chattered among your customers for this time period in terms of semi growth?And second question would be, please, on the gross profit margin. I mean this is quite significant downturn versus your target ratio of around 50%. I mean -- why is it not there more pricing power? What are the pricing actions for '22? And what else can you do to bring the gross profit margin back to around 50% by '22?And the third question, I mean, can you share with us on the book-to-bill? I mean, are we speaking about 1.3x, 1.4x? And also maybe the magnitude of the order backlog versus around 12 months ago.

[Lukas Winkler, President & CEO]

Let me take those questions quickly in the sequence that you're asking. Looking at into '23, '24, of course, it's like watching into the crystal ball, but nevertheless, these 2 indications that in semiconductor market will have a positive situation that we have to deal with the number of announced new fabs that the large semiconductor company would like to do.And if, let's say, the majority of those announcements will actually be executed, we will have enough additional businesses to continue the growth that we currently see because it takes somehow between 1 and 3 years to actually build a fab.So all the announcements that have been made in recent months, the actual buildup of those fabs will happen in '22, '23 and then eventually going to '24. So based on the number of new announced fabs, we should see a continuation of the semiconductor business even into '23, '24, at least from a CapEx point of view, is any cheap volume for the end users, depends then on the actual demand. But from a CapEx point of view, we certainly will see and enjoy a nice growth.On the gross profit margin, maybe to 2 comments there from my side. One is that the product mix, the current product mix that we have is more related to equipment manufacturers. So the -- it's a little bit skewed towards the higher volume for equipment manufacturers, and those products tend to have a lower gross profit margin compared with the products that we ship to the chip makers and end user, we call that.So having a higher exposure or higher growth rate on the equipment manufacturer side usually has a negative impact of our -- into our gross profit margin. That's a product mix issue. Secondly, it's a combination of what already Matthias mentioned: higher brokerage fees, higher logistics cost and so on, which cost a lot of money on one hand side.And then you also asked about should -- can we turn that into higher prices? Yes, we do, but we do it very carefully. We do not want to have a bad taste with our large accounts. So the large accounts, we do it very selectively. With newer accounts and with all the new products, we certainly have a higher pricing than before.But for existing customers, very loyal and long-term existing customers we try to share the pain with them, not just asking for a higher price even if we could, because that would destroy our good reputation with those long-term customers.On the book-to-bill ratio, we do not disclose the details and because the dynamic and the timing of certain shipments might create some wrong impression because we have products that we ship in 2 weeks, and we have products that we ship in 6 to 9 months. So book-to-bill ratio is not immediately something that we turn into revenue.But what I can confirm here is that we have, I believe, now, was it 5 or 6 consecutive quarters, something like that with a book-to-bill ratio above 1. And as I indicated in the first question, if we would not have any kind of bottlenecks, we probably would have -- would be able to ship [ 50 million ] more for our full year total. And so therefore, the book-to-bill ratio, I'm not going to give details, but I can confirm that the majority of the increased orders is coming from semiconductor customers as well as lithium-ion battery manufacturers.

[Jörn Iffert, Director & Analyst]

If I may follow up on the gross profit margin. I mean with the scale benefits, this may be improving product mix on the end user side and maybe also productivity gains after the capacity was ramped. Do you expect it to approach around 50% again in 2022?

[Lukas Winkler, President & CEO]

If all the bottlenecks will be gone and especially also on the electronic side, on the supply side, and going back to a more balanced product mix and a higher content of software, we should at least aim to get close to 50% again.

[Bernhard Schweizer]

Thank you, Jörn, for your question. We have Michael Foeth. [Operator Instructions] But now Michael Foeth, please go on.

[Michael Foeth, Head of Swiss Industrial Research]

Just 2 questions from my side. The first one is regarding your R&D spend in the quarter. It was down versus the previous quarter and also versus the previous 3 quarters. So I was just wondering, what explains those dynamics in R&D spend? Is that a saving measure to compensate the lower gross margin? Or should we expect it to go up again in the fourth quarter?And the second question would be, if you could quantify your investment in capital spending plans relating to the capacity expansion, both for this year and also for 2022, please.

[Lukas Winkler, President & CEO]

So on the third question, it has roughly nothing to do with balancing the post-COVID kind of weakness. On the R&D side, this is always a long-term spend that's now kind of -- has never been managed on a quarterly basis because of R&D project that you say long term.So the fluctuation on the R&D side has to do with the timing of the state of certain R&D projects. Usually, R&D projects are very expensive at the end of a project where we have to even buy a lot of material for prototypes and so on. And so therefore, the fluctuation only had to do with the distribution of the project [ ages ], let me call it like that. So it has nothing to do with any kind of short-term impact.And -- it is -- the R&D costs are on a high level and I don't expect that they are going down on absolute terms. They might go down as a percentage of revenue, but not in absolute terms. On CapEx plans, Yes, we will have a probably new record in CapEx for 2021. And we even expect in 2022 a relatively high CapEx number, but not as high as in 2021.

[Bernhard Schweizer]

We have a written question from [ Hamish Edsell ] in our chat. Let me just read that out to you.Please could you elaborate on the opportunity in battery testing for the automotive industry, both in the pre-installation stage and in the car service market? The penetration of e-cars in Europe, at least, is already growing very fast. So is this a large sales opportunity for you in 2022 and 2023?

[Lukas Winkler, President & CEO]

Let me start with the last part. Yes, it is certainly a nice growing market for us for the coming year. I would not only just refer to 2022 and 2023, probably the last 3, 5 years is kind of investment cycle into a lithium-ion battery manufacturing capacity. And we are -- I wouldn't say 100%, but more than 90% connected to the pre-installation and not to the service part of the lithium-ion battery market.So most of our products and especially the very expensive, sensitive instruments are only used in the quality control at the end of the integration line to make sure that the lithium-ion batteries are perfectly tight and no oxygen can get -- or air can get into the lithium-ion battery as well as nothing should get out, because lithium-ion in connection with oxygen is an explosive mixture, and that's exactly what we like to avoid. And so our products are more linked to the CapEx part of -- say, 90% linked to the CapEx part of the battery market, not to the service and recurring revenue part.

[Bernhard Schweizer]

Thank you, Lukas. If I look to our list of questions, I still see Jörn having raised his hands. Do you have any additional question, Jörn?

[Jörn Iffert, Director & Analyst]

Yes. Just a general question, please, on the product innovations going for '22 and '23. Let's assume please, a scenario where the end markets would be flattish. I mean with new product initiatives you have, can you add around $10 million additional sales, $5 million, $50 million over the next 1 or 2 years? What should be the way that we should think of this?

[Lukas Winkler, President & CEO]

It's more than $10 million and not in the $50 million range.

[Jörn Iffert, Director & Analyst]

And [indiscernible] link to semiconductor.

[Lukas Winkler, President & CEO]

The majority link to semiconductor, but there is also 1 or 2 applications that are outside, I would say that it's about 2/3 of the additional volume is -- or let's say around $10 million is from semi then maybe another $5 million from non-semi applications.

[Bernhard Schweizer]

I see that Marta has another question. Marta, just take on, please.

[Marta Kinga Bruska, Analyst]

So yes, I would like to ask you about this Micron announcement, where they had $150 billion for the next 10 years in investment into memory. Do you see some opportunities related to that? Or I guess you would kind of take us a little bit deeper into what this means for INFICON, please?

[Lukas Winkler, President & CEO]

I think we have touched on that already 1 or 2 times. The memory market is less sensor-intensive compared to the foundry market. So -- but having said that, even for memory manufacturers, especially if they now start to use EUV technology and Hynix and Samsung have announced but Micron not yet.So I expect that will intensify a little bit the sensorization of the end-user market, because they are going to use high technology as well. But on the normal circumstances, we have a higher exposure to the non-memory cheap manufacturers compared to the clean memory manufacturers. Nevertheless, [indiscernible] whenever the new fab is built, it's a new opportunity for us to sell.

[Matthias Troendle, VP & Group CFO]

I nearly fear that you found another mistake.

[Marta Kinga Bruska, Analyst]

No, I was correcting my note from the previous one, but I missed them.

[Bernhard Schweizer]

Thank you, Marta. Thank you, Matthias. [indiscernible] has posted another question in our chat. Let me just read that out to you. How much revenue could you theoretically turn over with the current installed capacity, not including supply chain issues? And how much will the capacity increase with the currently planned investments in 2021 and 2022?

[Lukas Winkler, President & CEO]

Good question. I don't know exactly how well we would end up with, but I would assume that what we announced as our guidance is probably the maximum that we can achieve from a capacity point of view. And as I mentioned before, we will -- probably will end up kind of adding 50% more capacity by the middle of next year compared to the level that we used to have in 2020. That explains a little bit what we could do theoretically over the next few years, because we expect the continuation of growth and therefore, invest in capacity.

[Bernhard Schweizer]

Thank you, Lukas. Any more questions from the audience? [Operator Instructions] If not, then I would like to hand over for Lukas for his closing remarks.

[Lukas Winkler, President & CEO]

Thank you for your patience. Thank you, Marta, for finding a quite big mistake in our written communication. It should not happen, but it's always highly appreciated it if somebody finds those mistakes. And I would like to just say thank you to all of you, wishing you a nice day and hopefully see you face-to-face in the future, not using video conferencing anymore. It's still not the same feeling, talking to a microphone or a video camera compared to talking to real people. Thank you for that, and have a good day. Bye-bye.

[Matthias Troendle, VP & Group CFO]

Thank you. Bye-bye.