(AOF) – Soitec launched a profit warning on the occasion of the publication of its quarterly revenues. Annual revenue is expected to be down around 10% at constant scope and exchange rates compared to the 2022-2023 financial year, and the EBITDA margin around 34%. The French technology group previously targeted a decline of around mid-single digit (5%) and an EBITDA margin of around 35% of turnover. The ambition of a turnover of 2.1 billion dollars, initially expected for the 2025-2026 financial year, has been postponed by approximately one year.
The manufacturer of high-performance electronic substrates highlighted that “inventory absorption among the group’s direct customers continued to weigh on the Mobile Communications business” in the third quarter, ended at the end of December, of the 2023-2024 financial year.
Revenue for this period reached 240 million euros, down 12% at constant scope and exchange rates. It fell by 13% in published data.
“As indicated in our last publication, the absorption of RF-SOI stocks by our customers continues to weigh on our revenues” declared Pierre Barnabé, general manager of Soitec. “We anticipate continuing to face challenging market dynamics for our RF-SOI products for several more quarters.”
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Key points
– World leader with 2/3 of the semiconductor production market using SOI technology (silicon wafers), recognized by all the major players in energy and electronics and granting a virtual monopoly;
– Turnover of $1.2 billion generated 92% internationally (65% Asia, 20% Europe and 15% United States) and distributed between mobile communications for 33 with RF-SOI, automotive and industry for 62% with AUTO POWER-SOI and AUTO POVER, SMARTSiC and POWER-GAN and intelligent objects;
– Business model based on 2 areas of expertise – Epitaxy and compound materials – serving 4 mass markets – smartphones, automobiles, cloud & mobile telecom infrastructures and internet of things – as well as on upstream association with producers’ projects semiconductors;
– Open capital with 3 reference shareholders -BPI (11.51%), the Chinese NSIG Sunrise (9.37%) and CEA Investissement (7.22%) -, Eric Meurice chairing the board of directors of 14 members and Pierre Barnabé being general manager;
– Unlevered balance sheet with €1 billion of equity.
Challenges
– Strategy 2026 financed by €1.4 billion and aiming to triple turnover to €2.3 billion and an operating margin of 40%;
– Innovation strategy with 2 unique technologies -Smart cut and Smart stacking- and 2 expertises -epitaxy and compound materials- serving 4 mass markets: smartphones, automobiles, infrastructures for cloud and mobile telecommunications and IoT;
– R&D at 11% of turnover (39th patent applicant in France and 2nd among ETIs with 3,700 patents including 2,700 active),
– co-development partnerships with CEA, Leti… or customers and suppliers,
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3 areas of development: compound materials, vertical integration of circuits and qubits, materials for quantum computers;
– Environmental strategy validated by the SBTi aiming for a 25.2% reduction in its carbon emissions by 2026 compared to 2020, by taking into account sustainable issues from the design stage, the energy performance of industrial sites, the use of energy -carbon and low-carbon freight, and supplier commitment;
– Balanced distribution of the 6 production lines (Bernin, Pasir Ris, Shanghai and Hasselt) limiting logistical risks;
– Ability to benefit from the boom in the SOI market, through internal growth and partnerships (Qualcomm and GlobalFoundries) and strong positions in the innovative SmartSiCTM substrates essential for the deployment of 5G cellular.
Challenges
– “Early cyclical” profile because it is upstream of the production chain;
– Ability to benefit from the positive 5G effect for business growth;
– Waiting for launches in piezoelectric diversification, gallium nitride and silicon carbide;
Growing market and price tensions
According to the SIA, global chip sales stood at $151.7 billion in the first quarter of 2022, an increase of 23% year-on-year. Sales increased in all major regional markets and for all product categories. As global uncertainties, including the war in Ukraine and the health crisis, weigh on supply chains, demand for semiconductors continues to significantly exceed supply. Manufacturers Samsung and TSMC have announced that they will raise their prices, in a context where players in the sector have good room for maneuver and benefit from reinforced negotiating power. However, wage increases and component prices could weigh on future performance.