ams-OSRAM AG

Good morning. We welcome you to our latest business and financial update on fourth quarter and fiscal year 2024.

Our CEO, Aldo, will comment on business and strategy. Our CFO, Rainer, will focus on financials.

During the call, we are referring to the earnings call presentation on the web. First, we look at the fourth quarter.

Second, we look at the full year. Please note, we always provide an extensive full IR presentation on our website for further details.

Aldo, stage is yours.

Thank you, Jorgen, and good morning, everyone, from my side as well. We're on track.

We generate cash. Our turnaround is in full swing, reestablished the base is ahead of plan.

The savings are showing effects more and more in our profitability despite the heavy headwinds during the year and the quarter. Let us look at the financial performance of the group on Slide 2.

Revenues came in flat quarter-over-quarter at EUR 882 million, above the midpoint of the guidance. Tailwinds from the stronger U.S.

dollar helped a bit. In brief, the strong seasonal aftermarket auto lamps business compensated a small seasonal and cyclical quarter-over-quarter decline in semis.

Year-over-year, we're only down 3% despite the weaker I&M and other semi markets and the phaseout of an OEM lamps module business. Now on profitability.

Adjusted EBITDA margin improved year-over-year by 50 basis points to 17%, thanks to reestablish the base and a nonrefundable engineering payment that we keep receiving. Why down EUR 60 million quarter-over-quarter?

Well, we reduced wafer starts in Q4 to reduce inventories. We had customer engineering payments in both quarters, but Q3 was higher due to some catch-up payments.

But with EUR 150 million, the same absolute number as a year ago on a lower revenue base. Now quickly on the segments.

Page 3, I look at the traditional halogen lamp business. Revenues were up 18% quarter-over-quarter.

The seasonal halogen lamp aftermarket business came in strong at every year, we can almost set your watch by it. A year ago, we still have some legacy OEM module business running, which explains the slight year-over-year decrease.

Within the EUR 275 million, we had EUR 45 million of specialty lamps sales for industrial and entertainment applications, a bit up compared to last quarter, but no real change to the really low market dynamics. Though we are convinced that we are starting to see the bottom of the cycle in this area.

The strong other Lamps aftermarket season drove adjusted EBITDA up by 35%. We recorded EUR 50 million or 10.2% after EUR 37 million in the third quarter.

Now it's time to look at the semiconductor business. I'm on Slide 4, OS first.

Optoseemis came down 8% quarter-over-quarter, a bit seasonal, a bit cyclical, we come to that. Revenues at EUR 350 million after EUR 381 million last quarter.

Again, we booked nonrefundable engineering payments for an LED technology project on which we cannot share any more details. But as I said, in Q3, we even got more of the engineering payments.

They will recur every quarter for the time being. And one day, if successful, this project will turn into a whole suite of new products.

Adjusted EBITDA came down to EUR 51 million. Three main reasons.

First, in Q3, we had roughly double the normal quarterly nonrefundable engineering payments due to a catch-up. Second, fall-through in line with the lower revenues.

And third, we reduced wafer starts to reduce inventories. Now on Slide 5, the results for our Sensor and ASIC business.

They did well in Q4. Revenues down just 3%, in line with seasonality in smartphones and wearables, coming in at EUR 258 million.

Adjusted EBITDA even went up by 15% to EUR 55 million compared to the third quarter despite the lower revenue base. We established the base brings an improved cost position, but we also benefited from a one-off accrual effect as well.

On top, the stronger U.S. dollar proved a bit helpful.

We move on to Slide 6 on end market dynamics. Semis in total came in down 3% year-over-year and 6% quarter-over-quarter.

This can be explained by looking at the main verticals. First, automotive, our biggest exposure.

Revenues came in even a bit better than we thought, 3% up, where we had guided flattish quarter-over-quarter. Cyclical demand was indeed down with the ongoing uncertainty in the supply chain.

However, we succeeded in reducing the order backlog for some scarce parts. In addition, new position sensor project ramped up and revenues there grew noticeably.

-- a 14% year-over-year decline, both due to the inventory correction as well as a high base of comparison. You might remember, Q4 '23 has been a record quarter for the Audi Semi revenue so far.

Second, Industrial Medical. This is still the weakest of all.

Horticulture revenues declined as the peak installation months are during the third quarter of each year and new greenhouse lighting fixtures are installed for the winter season. Professional Lighting segment actually is still okay.

Mass market and medical, no news, but it feels like we have reached the bottom. Third, consumer, where we are mainly supplying sensors to smartphones and wearables, a strong quarter with EUR 210 million in sales.

The seasonal decline of 9% comes after typical big Q3 quarter when a large new mobile phone platform trend. Demand from the Android space remains very healthy.

Some parts were even becoming in short supply. The next slide is for you, Rainer, as we are talking about your favorite subject, cash.

Thank you, Aldo, and hello, everyone, from my side as well. When we tapped into the Eurobond, we said that we wanted to use the proceeds to reduce supply chain financing, which we did.

In Q3, we benefited from a $250 million customer prepayment that boosted operating cash flow. We did not get such a prepayment in Q4, but another tranche of the nonrefundable engineering payments.

As such, fourth quarter operating cash flow came in strong with EUR 79 million, as you see in the table at the bottom of the slide. We actually reduced factoring in Q4 by around EUR 100 million, and you can imagine how strong the cash flow would have been without that effect.

You can also see the improvements from reestablished the base kicking in. Inventories went down a bit in Q4 due to reduced wafer starts.

Just for the avoidance of doubt, net interest paid is always included in the definition of operating cash flow and free cash flow. Now on CapEx.

basically flat with EUR 104 million in Q4. But almost half of that number, more than EUR 45 million were still payments from the microLED equipment overhang.

Q4 was the last quarter with such a significant burden for microLED. Without that, we would have already been below our 8% CapEx to sales target.

Looking at inflows from divestments at the bottom of the table, the EUR 27 million are almost entirely for microLED equipment that we were able to resell. All in all, this led to positive free cash flow in the fourth quarter.

Now we are obviously proud of the chart on the right side. We turned the heavily negative free cash flow into a positive one within 1 year from minus EUR 332 million to positive EUR 12 million.

We could rein in CapEx significantly. We implemented to reestablish the base faster.

We could leverage our leading technology position to receive significant upfront payments by customers, which in the end made this success possible ahead of time. A clear indication that the company is back on track.

And now back to Aldo for the full fiscal '24 strategy and business summary.

Thank you, Rainer, and I'm now on Slide 8. 2024 presented some surprising challenges.

The biggest headwind was certainly the cancellation of the microLED cornerstone project. Later in the year, the weaker auto demand came on top.

We reacted fast and decisive and I'm pleased with what we have achieved in these circumstances. Before we touch upon some of the points in more detail, let me share the major achievements from my perspective.

The focus on the core portfolio in the semiconductor business has proven itself right. We showed a solid 7% revenue growth when you correct reported revenues in semis for the contribution from the exited noncore business.

The savings from our reestablished base strategic efficiency program are exceeding the fiscal year '24 targets and starting to show effect. It will be much more visible in 2025 with improving profitability.

The noncore semiconductor portfolio is almost entirely out of the door. Customers must still place some very last orders.

Technology leadership is at the heart of our strategy and structural growth ambition. As you know, we won the German Future Award for our latest automotive forward lighting solutions and customers entrusted us with cutting-edge technology developments that they are paying for.

New business won almost at the same pace as in 2023, close to EUR 5 billion of design wins stent on the tally. We stabilized and improved our company profitability despite the hit from the discontinued large microLED program.

And above all, most importantly, we finished the 2024 with a positive free cash flow, including net interest. Customer prepayments were pivotal for this achievement.

With that, let's take a look at the business on Slide 9. In 2023, we divested about EUR 124 million of revenues in the Lamp segment.

At constant currencies and the same portfolio, revenues would have stayed almost flat, which is 1% down year after year in a like-for-like comparison. For fiscal year 2024, we recorded in total EUR 3.43 billion with a small currency headwind of EUR 9 million.

Now considering re established the base and ignoring the noncore portfolio revenues, we grew 4% year-over-year on group level. The Lamps business declined year-over-year by 14%.

Like-for-like, the decline was minus 4%. I just mentioned that we had sold a number of unprofitable businesses in 2023.

The 4% decline was essentially because of exiting some OEM module businesses. Looking at the semis, reported revenue stayed flat.

But if we look at the core portfolio only, we see an increase of approximately 7% year-over-year, very nicely in line with the midterm trend line growth ambition for our semiconductor business. If we look one level deeper, it's certainly evident that the growth in the core comes from the rebound of the consumer business, driven by launching of the new products, including the regained ALS socket that we have spoken about earlier.

We grew by almost EUR 90 million year-over-year in consumer applications to EUR 769 million. Automotive was just slightly down despite the inventory correction that hit the second half of 2024, approximately EUR 980 million versus EUR 1 billion a year ago.

Industrial Medical was also down in '24, reaching a low of around EUR 680 million, which looks like to be the bottom of the cycle. With that, back to Rainer for more details on the financials.

Yes. Thank you, Aldo.

And we are now on Slide 10. With reported revenues and absolute EBITDA down, EBITDA margin stayed flat at 16.8% -- supported by reestablished the base, we were on track to improve the margin, but then the auto market slowdown in H2 sped the party.

You often asked where we see the great progress of reestablished the base in the numbers. Now you see it in the EBIT numbers on the right-hand side, a lower cost base and the gradual phaseout of nonprofitable products led to an improved adjusted EBIT margin by 50 basis points.

But you can also see it if you look a bit deeper into a lower R&D spending and lower SG&A. Again, once markets improve, it will certainly become more visible.

We switch to Slide 11, net earnings and earnings per share. On the left, you find the adjusted figures.

While adjusted EBIT was up a little, adjusted net result declined year-over-year by EUR 47 million. The higher interest cost of placing the 10% and 12.5% notes in '23 took that.

On top, the income tax costs went back to normal after we had a positive one-off effect of about EUR 20 million deferred taxes in '23. Consequently, adjusted earnings per share also declined deeply from EUR 1.61 to just EUR 0.03.

Please note the different share counts in '23 and '24. Now the IFRS net result improved by EUR 828 million to a negative EUR 785 million in '24, much improved, but still obviously a light years away from where it needs to be and where we want to be.

It must become positive as quickly as possible, and we are working on it. Looking a bit deeper.

We had to write off EUR 1.3 billion goodwill in June '23. And last year, we had to -- we had to be more than EUR 0.5 billion of microLED strategy adapption expenses and also other transformation costs, including reestablished the base amounted to EUR 100 million on top.

As a result, the earnings per share are still negative in '24, minus EUR 7.94. Now on to Page 12.

I just mentioned the important contribution from reestablished the base to the bottom line already in '24. Let us take a closer look.

End of third quarter, our realized run rate savings stood at EUR 85 million as we reported last quarter. Our progress in implementing the program continues.

End of December, we can report EUR 110 million. of implemented run rate savings, well ahead of the EUR 75 million end of '24 target.

Last time, we upsized, told you the program to EUR 225 million run rate savings by the end of '26. We have already identified and planned all necessary measures and actions to realize that.

When it comes to the old nonperforming noncore portfolio, we can report that the accelerated end of life is basically done, as Aldo mentioned. Some final orders might still come through this year.

We just talked about the positive contributions of Restis base to the bottom line. Let's look at Slide 13.

Gross margin stayed around 29%. However, during the year, we rationalized quite a number of production lines, the full effect of which will be seen in '25.

You can observe the implemented savings best in the OpEx. Both adjusted R&D expenses and adjusted SG&A came down by 9% and 8%, respectively.

Now switching gears from the P&L to the balance sheet. You find the latest update on debt, liquidity and maturities on Slide 14.

Our cash balance remained unchanged. We had EUR 1.1 billion cash on hand end of the year.

By the end of December '24, we paid back the short-term bilateral facilities. However, we also received EUR 140 million in new bilateral loans exactly as we told you we would.

Next in line is the '25 convert. We are going to pay it back at maturity in March from cash on hand.

The value of the Malaysia sale and leaseback transaction remained stable at EUR 441 million as interest accrual was offset by FX. This brings us to a pretty much unchanged net debt position of EUR 1.85 billion compared to the previous quarter.

The outstanding minority put options amount stood at EUR 585 million or 40% of outstanding shares end of December. Towards the end of '24, we only saw a small amount of shares tendered.

Our revolving credit facility could in principle fully cover an exercise of all outstanding minority options. Talking cash -- taking cash RCF and bilateral lines into account, our available credit remains strong at around EUR 1.76 billion.

The factoring lines that we reduced in Q3 and Q4 is still available, but not shown here and would add to that. On the right, you find the maturity table of our outstanding debt.

And with that, Aldo, please tell us the latest update on business and technology.

Thank you, Rainer, and let's please switch to Slide 15. Winning new business is essential for our structural growth model in semis.

Fiscal '24 was again a very successful year in this respect. We could book well over EUR 1 billion of new wins in the fourth quarter despite the slowdown in autos and the weak industrial medical market.

This brings the full year fairly close to the EUR 5 billion mark again. The new wins in the fourth quarter were very well distributed with many smaller projects, reflecting the broad business traction that we're enjoying.

Still a few stand out. We made especially good progress in China with automotive products.

Our product from another leading Chinese OEM, and we landed multiple design wins with a broad portfolio at that OEM that will feature many new models. But the momentum also continued in many other applications, nice wins in professional lighting, new sockets from a spectral and ToF sensors in Android smartphones as well.

In a full year or to date few, the new business won accumulates remarkable numbers. Now let's take a look at Slide 16.

You'll hear and read so much about the wonderful world of AI-driven robots and robotics in general. This is an interesting application for sensor suppliers like us.

All these robots require advanced human machine interfaces. Many of our sensors are perfectly suited for this application, be it on lasers for LiDAR, time-of-flight spectral sensors, we offer a broad range of essential sensors that are highly reliable and superior features.

Momentarily, our traction in this field is just starting, and it's very granular business. Many of those robots are just built in the thousands, but we're working on it, and we want to provide critical components for the field.

Innovation and technology leadership is at the heart of our business, as you know, and we are now on Page 17. In December, the Federal President of Germany awarded one of our technology teams with the German Future Award 2024.

I'm very proud of the team who has advanced the boundaries of technology in microscopic LEDs, interconnect layers and associated drivers and super thin conversion layers. But we don't innovate for the sake of innovation.

We want to make money with it. And this technology has led to our feature product in automotive VviOS that we've spoken about many times, the 25,000 pixel metrics headlight.

We secured by now hundreds of millions of design wins already. But from an application perspective, this is just the beginning.

One can think of micropjectors, transparent displays, optical data communication links and even more advanced ideas. While we keep our R&D spending in check, we will continue to invest in key technologies to secure future growth.

Wherever possible, we will invite customers to co-fund such developments as we're doing with the project where we're receiving nonrefundable engineering payments that we spoke about earlier. So let me summarize the key developments of Q4 and fiscal '24 on Slide 18.

In the December quarter, we delivered revenues in a difficult environment above the midpoint of the guidance. We delivered profitability above the midpoint of the guidance, and we came in free cash flow positive.

For the full fiscal year '24, we finished with positive EUR 12 million free cash flow. The core semi portfolio grew approximately 7%, clearly driven by the ramp of new sensor products.

Reported revenue was a bit down due to the deconsolidation of LEMS and System business and the steep decline in the old noncore semi business. We established the base implementation is progressing really well with already EUR 110 million run rate savings implemented.

The non-semi -- sorry, the semi noncore portfolio is mostly history and customers continue to love our products and innovation, close to EUR 5 billion in new business won in '24 show this. Now let us look at Q1 and the fiscal year '25 outlook on Slide 19.

On the first quarter, we expect revenues to land between EUR 750 million to EUR 850 million. Automotive aftermarket lamps will be seasonally lower.

Automotive semis should see their low point in view of the persisting uncertainties and corrections, although order intake has improved recently a bit. Industrial and Medical continue to be weak.

Consumer continues to go down seasonally, Christmas season is over. In line with fall-through, but we reestablished the base savings making a real difference, adjusted EBITDA margins will be between 16% plus/minus 1.5% at euro-U.S.

dollar exchange rate of 1.05. For the fiscal year 2025, looking at revenues, we think we will have a pronounced first half, second half seasonality in our business.

We have it every year, but we think of the seasonal cycle in the Automotive Lamps aftermarket business or in halticulture from consumer handhelds and auto semis. This year, the seasonality will be even more pronounced, we think, with the cyclical low in automotive semis in the first half and the persistent weakness in industrial automation and medical.

Why are we optimistic that H2 will be better than the first half? Well, principal drivers are scheduled project ramps in automotive, industrial and smartphones.

Cyclical recovery, we also start to see a little bit in higher order intake that will come now on top. Looking at profitability, a word on the new tariff war.

We assess the situation to the extent new tariffs are known or expected. In detail, the trade flows are complicated.

We do currently not see a meaningful impact to our cost base. A notable impact on our business would come along when global car production, for example, is negatively affected or when people start to buy fewer smartphones because of the trade tensions.

All in all, we have to see how the situation develops, obviously. We are ahead of realizing our run rate savings from reestablished the base.

This will lead to improved gross margin and bottom line even with very moderate revenue development compared to 2024. Looking at cash flow, we will be very strict on CapEx investments and plan for less than 8% of sales, lower than our target operating model.

Finally, we expect free cash flow to come in exceeding EUR 100 million for 2025 for avoidance of doubt, obviously now days, including net interest paid. This concludes our prepared remarks, and Rainer and I are happy to take your questions now.

First of all, could you please make an update on the inventory situation in your main markets, notably automotive and industrial? Where are you standing from normal inventory levels?

And second question is on the OpEx modeling, given that you have accelerated cost cutting and you are ahead of schedule. How should we model OpEx for 2025?

And attached to that, what was the amount of nonfundable engineering payments in Q4? And what should we expect for the full year '25?

The inventory levels, fortunately, relatively normal overall. We still continue to see them being a bit on the high side on the industrial side, on automotive and generally in the market, they are at okay levels.

So it was more at our customers that reduced their output also that we indirectly saw the weak demand in Q4 and expect in Q1 also to see that continue a bit. But fortunately, we are seeing a bit of an uptick in order intake in the last couple of weeks.

We hope that is sustainable and that would then help us in the second half of the year. The other one on the margins, Rainer, perhaps you can answer.

Yes. OpEx, I mean, certainly reestab the base will continue.

We will generate more savings. The question of how much of that will be visible then in the P&L is also kind of a bit the question of the end markets.

But as we also said on that chart, I mean, we certainly expect quite a bit of an improvement in the second half. And then kind of with the savings we are generating improving revenues, you will see OpEx as a percentage of revenue coming down in '25 and also helping then on the margin progression overall.

The NREs in Q4 were roughly half of what we got in Q3. double digit, low double digit, I would say.

And that is about the amount that you should be seeing then going forward. Maybe a quick reminder how NREs work in the P&L.

If you get, let's say, EUR 1 million NRE, you reduce R&D expenses by EUR 1 million and move that cost over to COGS. And then you have EUR 1 million higher COGS.

So basically, NREs have 0% margin, 0% gross margin. So for that, it's not good, but it's obviously good as it lowers the R&D expenses.

You referenced automotive sensor design win it seemed material in Q4. Can you give a little bit more elaboration on what exactly that sensor is and how you see automotive sensors contributing to your growth in coming years, '25 and beyond?

Sure. Yes, those are a couple of different sensors that we see in the automotive space.

It's partly position sensing that is being used to basically see where the drive-by-wire that is now increasingly implemented, whether pedals or other equipment is standing. So it just basically gives that signal on the position of a certain mechanical feature in the car.

The other one is the hands-on feature. Basically, cars want to know that you have your hands on the steering wheel.

-- and we have a very effective way of measuring that. And with that, it's an easy and solid sensor to implement, and that's a feature that is becoming more and more widely used.

It's at the moment, still a little lower-digit euro number per quarter, but we see it growing with a very nice solid double-digit rate at the moment, and we expect more and more of the sensors to be included in cars.

And in your Q1 guidance, can you give -- you're guiding overall at the midpoint to around minus 9% quarter-on-quarter growth. Could you break that down just in terms of, say, what is above 9% and what is below 9% across automotive, industrial and consumer?

Yes. So I mean, you need to look at all the different effects we have here, right?

Our traditional business the seasonality comes down a bit in Q1. Our CSA business sees also strong seasonality, right, because it's always loaded towards the second half of the year.

So there will be significant reduction. And also in OS, you see a bit of a reduction as we were able in Q3 and Q4 to pull in some of the delinquencies that we had and kind of we serve those delinquencies and there's nothing left.

So kind of basically all segments will be a bit down. At the same time, I mean, we see then the order intake a bit an improvement in CSA, yes, as always, will then be improving in the second half of the year.

And yes, we also see an improvement certainly in the order intake in the automotive market...

And if I can just squeeze one last one. You referenced a number of design wins in the second half for your strong second half, including mobile sensors.

Can you confirm that you will be gaining further content because you already gained some content in the second half of 2024. Are you gaining further content broadly in mobile phones, including flagship phones in the second half of 2025?

Yes. I mean it's clear that the launch that we had this year will continue to spread throughout the various platforms in next year.

So we will see more and more usage of the products that we just recently introduced both in the non- and in the Android space.

First is just around the comments on the H2 recovery. I mean most of your peers and kind of in your commentary, it seems like visibility in both auto and industrial is pretty limited beyond kind of Q1 and this half.

So wondering what gives you confidence in that recovery? I appreciate you have the design wins, but do you see any risk that those get pushed at all?

Well, obviously, it's a volatile environment. So it's our best guess.

But the design wins, obviously, and the rising content per device content per vehicle, for example, is a pretty clear trend. We feel that a lot of the the volatility in terms of models being pushed out and things like that, that seems to be a bit behind us.

things start to calm down and become more plannable again is our feeling. And in that sense, we do hope that we see this improvement.

Secondly, if you just look at the overall number of cars being built, it isn't really that different. I mean it might feel that way if you live in Europe and you read the newspapers here, but globally, we still build roughly the same amount of cars in '25 is everybody's expectation that we do in '24.

And given that we are globally very well set up and have very similar market shares, I still think that's the basis for overall demand for us. And what we have been seeing last quarter and probably still see in this quarter is basically a bullwhip effect of our customers kind of stepping on the brake a bit and they step a little bit on the brake as an OEM, then the Tier 1s do it and it ends up with a double-digit variation.

But we start to see more orders coming in again short term. So for me, that's an indication that these inventory levels are now so low that if they want to build cars, they have to order product.

And that also helps to see why throughout the year, I think we will start to see a bit of an uptick again.

Got it. And the second question is just on utilization rates.

I know it's kind of difficult for you guys to comment on group level utilization levels given the diverse manufacturing base. But -- can you give any color on current levels and kind of how you expect that to trend through the year?

Well, I mean, obviously, as Rainer said, in Q4, especially in OS, we stepped on the brake to reduce inventories. I think you've seen inventories come down EUR 40 million or so in the quarter that supports, of course, the free cash flow generation.

So utilization there was -- we have quoted 70%, 80% numbers earlier. Definitely, we were below that in Q4 for OS.

When we look into the future, we see with rising -- stepwise rising demand normalization of the demand pattern that, that will go up again and will continue to improve. And that will also mean that we will have to continue to invest.

But as you can also take from Rainer's comment that we will be below 8% this year. You can also see that we still have some room to grow within the current infrastructure.

Congratulations on the execution on the cost cutting and the design wins, broadening of the -- sorry, the strength. Just had a couple of questions.

First, on the free cash flow. So I know your definition of free cash flow includes disposal.

On the north of EUR 100 million free cash flow for '25, can you just clarify what's your expectation of disposals in that number? And I've got a quick follow-up.

Yes, Didier, it's correct. It includes disposals.

And while we continue to hope that we will close a Kulim deal pretty -- let's say, in the near future, that is not included in that number, obviously. What is included is only some minor disposals of some equipment, low double-digit number.

Low double digit. And on the calendar year '25 guide, so you've been explicit on the H1 versus H2.

But I mean, what's your sort of gut feel at this point? Are we looking at mid-single-digit growth or low double-digit growth?

Because I'm also thinking about the disposal of noncore revenues in there. So if you can maybe just help us understand the mechanics there, that would be helpful.

Did you mean year-over-year growth?

Yes.

Basically, I think what we're describing is a weak first half, as you can see from what we're guiding in Q1 and then a stepwise recovery in the second half of the year. I think overall, this will not yield much, but it will be the right pattern throughout the year that hopefully will continue into '26.

But overall, basically flattish. Perhaps if FX moves our way, it might go up a bit by that.

But we are not talking significant growth as a number of our markets are still muted.

Perfect. And maybe just a quick one.

On the minority, the OSRA minorities, any update there?

I saw that your stake increased a little bit or at least the float has decreased a little bit. Any update on what you might do with that?

No, really not much of an update. I mean, as we said, we expect the verdict in the second half of the year.

We certainly expect a bigger portion of the shares than being tendered, not all of them, but there's no change in our...

You mentioned improving order dynamics. Was it broad-based?

Or is it a bit different amongst automotive, industrial? And then OSRAM, you had quite significant exposure to China in automotive.

How do you see the business there Q4 and going forward?

Sure. So yes, on the order entry, it is fairly broad-based.

We have in many businesses in our book-to-bill above 1, auto still being a bit below that, but consumer being quite good also in our more broader-based industrial markets for OS also now above 1. And auto, as I said, still below 1, but improving.

So yes, let's hope it continues. It's still early days.

I don't want to declare victory yet, but at least it feels a bit different from when we spoke last time 3 months ago. So let's hope it continues.

On Auto China, it continues, of course, to be a very important market for us, and we continue to work very intensely with our customers there on introducing new technologies, and they continue to be very hungry for those. At the same time, we continue to optimize our cost structures, as you have seen, and that helps us to defend also our shares at the lower and midrange of the product portfolio.

And we still think that China will continue to be the dominant player in automotive in '25, both in terms of overall volumes, but also in terms of bringing new product to the market.

You would confirm pricing or price pressure is more pronounced in China than in other regions?

Yes. Although, I mean, of course, everybody is looking at what's happening in China.

There's no OEM and no Tier 1 that is not present in China as well and sees what is going on there. But overall, we've been able -- it's not really a different picture from what we spoke about in Q4.

I mean you have to do your homework. You cannot rest on your laurels.

But if you do your homework, you can continue to manage the price with associated cost downs and at the same time, do a mix upgrade with basically selling newer, higher-margin parts that you have far less competition in. As you know, our latest and greatest products usually are not supplied by Chinese competitors, but by a Japanese competitor, for example.

And that, of course, is a very different ball game in terms of competitiveness.

A couple of questions from me. Firstly, on R&D grants, what were the kind of -- what was the amount of R&D grants you got in the fourth quarter?

And another follow-up on China. Where do you see your market share in the Opto semiconductor business in China at this point?

Has there been any change in your market share? Or have the Chinese competitors -- I mean, the local competitors become any stronger or it's still the same?

Yes. On the second one, it's basically pretty stable, 35%, 40% market share on auto, which is our main market there.

In the other segments like general lighting, we have very low market share, but we also are not fighting for that, as you know. So really in the market that matters most to it, auto market shares are quite stable with the dynamics that I just explained, you have to do your homework on the cost to protect your mid- and low end, and you have to up the mix with innovation that the Chinese cannot follow with.

And automotive remains still a different market. There are still today, many OEMs in China that especially for safety relevant product like headlamps want a high-quality assured, and we stand for that.

And in that sense, that is still a good wall of defense. Again, you cannot rest on your laurels, but it is something that you can build upon.

On the R&D grant, I would ask Rainer to answer.

Yes. Sandeep, I mean, R&D grants as opposed to NREs, right?

I mean NREs is something we've got significant in Q3 and then more in Q4. That's a different animal.

R&D grants to kind of pay a part of our R&D costs, mostly by the German government, that's a pretty stable thing, right? There's no special effect we get every quarter, which is a high double-digit million euro number per year.

So -- but that's quite stable now.

And just one quick follow-up on your new design wins in the second half of the year. How much of that new design win activity that you are expecting to grow your revenues in the second half comes from smartphones and how much from the automotive side?

Well, we measure the design wins in lifetime value. So with that, you automatically kind of skew towards auto because those programs last longer.

If you're on a car, you're normally on there for 4 years or so until the refresh. for a cell phone, usually, it is a bit shorter, especially on the Android phones, there is quite a bit of turnover on the programs.

So that is less. But still, we have quite some traction on the consumer side this time.

So probably in the last quarter, it was roughly half-half, I would say, auto, non-auto. For the overall year, probably auto would be more heavily weighted.

I just have 2 questions. One is, could you just talk about the maximum content you can gain per smartphone in a perfect world?

I think clearly, you've got some sockets on the front side, but there's some opportunities on the back. So just interested to know whether you can do theoretically more than $2 per device?

Or is that not realistic? And the second one would just be on the new wins in auto LED.

Are you now integrating the driver, which used to be done by people like Melexis and Elmos? Or are you still leaving that to them to do as a third party when you do these integrated, more complex modules?

On the second part, to start with that, we have a number of products where drivers are included. One of them that is spreading very widely is this intelligent RGB.

This is multicolor LED that you can individually address that has a driver from an AMS factory. Also in the Avios product, the headlamp product, we are increasingly in-sourcing this and supplying that out of our own factories.

So that's a good story for the group. On your first on is this $2 per phone or more possible?

Yes, $2 -- more than $2 is possible. And actually, there, for example, the flip phones or even the threefold phones help because usually, they require also an ALS for every display.

That's one thing. And obviously, also on the camera side, people are still striving for better and better image quality.

So they are putting more sensors on that side as well. And on the ALS product, sensitivities are increasing.

The screens are getting less and less transmittent. So you need higher and higher sensitivities, and that is also not making the product cheaper.

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