CEO interview

How would you summarize your 2022 results?

We had a great year, breaking through CHF 1 billion in net sales and with record EBITDA, EBITDA margin and free cash flow. While we enjoyed positive market conditions for most of the year, our success really reflects our competitive advantages in market position, technology, operational strength, and our engaged and talented people.

What were the main positives in your view?

I’m very encouraged by our ability to stay ahead of the curve in our fast-changing market. Despite the uncertainties that emerged during the year – inflation risks and economic slowdown, trade tensions, the war in Ukraine – we still increased our share to more than 75% in our biggest market, semiconductors. We were very successful with our specification wins on products our customers will use in future applications. And our service business continues to outperform, with very strong sales growth and an attractive EBITDA margin, which helps buffer cyclical effects.

And the biggest challenges?

It’s always a challenge to balance the demands of a fast-growing market – securing capacity, developing technology, optimizing supply chains – while making sure we can quickly adjust the business to deal with the inevitable cyclical ups and downs. But our 2022 results show that we could handle those demands.

Where do you think we are in the semiconductor business cycle today?

There’s a consensus in the market that spending on equipment used to manufacture semiconductors in 2023 is likely to decrease by about 20% from the record levels we’ve seen in the past few years before returning to growth in 2024. This is mainly due to slower growth from high energy costs, overall inflation, and geopolitical factors. Obviously it’s difficult to forecast but we run our business on long-term metrics and those continue to look very promising.

How important is the Malaysia facility to your business?

Our ability to grow the business quickly and maintain very attractive profitability is largely due to our investments in Penang over the past few years. Our facility there gives us flexible production capacity, local engineering expertise, access to regional supply chains, and faster on-the-spot customer support. We employ some 800 to 900 people there and production capacity is up about 60% compared with a year ago. We’re approaching the CHF 300-million level and we think we’ll go above CHF 1 billion eventually. It’s a big advantage for us and we announced last year plans to expand the facility even further in the coming years.

What are you doing to improve operational performance?

Since we aim to double sales to CHF 2 billion over the next five years, it’s vital that we become even more efficient through the business cycle. That means harvesting more economies of scale from our global footprint. In 2022, we invested some CHF 20 million in Malaysia to build flexibility and get closer to customers. We increased sourcing from best-cost countries. Our new ERP system is up and running, which will not only speed up our internal processes and give us better visibility on the business, but will also improve the customer experience which will help us capture a greater share of wallet. We’re also investing in digital infrastructure around product design and modelling to speed up time-to-market. A sharper focus on sustainability also drives operational excellence. We use our resources more efficiently, which means streamlined manufacturing processes, lower energy consumption and costs, replacing harmful chemicals, smarter packaging and less waste.

How are measures to “reshore” chip production impacting your business?

So far, we haven’t seen any significant impacts. Our global footprint means we are locally present to meet our customers’ needs, wherever they are, so we’re agnostic about where the production takes place. Reshoring could lead to higher capital expenditures by some customers to build new capacity. Geopolitical pressures always create some level of market uncertainty and our job is to be ready for whatever comes.