(AOF) – Soitec has reduced its annual objectives. The turnover for the 2023-2024 financial year of the French manufacturer of high-performance electronic substrates is now expected to decline slightly by a percentage of approximately “mid-single digit” (5%) at scope and exchange rate. constant compared to the 2022-2023 financial year. The Ebitda margin is now expected at around 35% of turnover. Soitec previously anticipated stable like-for-like sales and an Ebitda margin maintained at around 36%.
“The severe correction in the level of stocks of products dedicated to radio frequency applications for smartphones took place in the first half of 2023-2024 as anticipated. However, faced with a weaker smartphone market than expected, the clearance of stocks with our customers takes longer than initially anticipated,” explained the French technology group.
In the first half, the group recorded net income, group share, down 16% to 80 million euros and EBITDA from continuing activities down 21% to 132 million euros. Soitec thus displays an Ebitda margin of 33% compared to 35.5% a year previously. “This decline essentially reflects the choice made by Soitec to continue to invest significantly in its R&D activities,” explained the company.
The latter, however, recorded a consolidated turnover of 401 million euros, down 15% both on a published basis and at constant scope and exchange rates. Turnover for the second quarter of 2023-2024 reached 245 million euros, down 9%. It shows a decline of 7% at constant scope and exchange rates.
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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 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.