Soitec posts quarterly revenue approaching €70M

Company sees sustained growth in communication and power 200mm wafer sales compared with Q1'17

Soitec, a developer of semiconductor materials based in France, has announced consolidated revenues of €69.6 million for the first quarter of FY'18 (ended June 30th 2017), up 26 percent compared with €55.4 million in the first quarter of FY'17.

This represents a 22 percent increase at constant exchange rates in line with the group's expectations for the first quarter of FY'18 sales growth to be at least 20 percent at constant exchange rates compared to the first quarter of FY'17. On a sequential basis, first quarter FY'18 revenues were 1 percent higher at constant exchange rates than in the fourth quarter of FY'17.

Paul Boudre, Soitec's CEO and chairman of the board, commented: "We started our fiscal year 2018 on the same positive note than we ended our fiscal year 2017. Compared to the first quarter of last year, our performance was driven by sustained demand in Communication & Power 200mm wafer as well as the particularly high level of growth that we enjoyed in 300mm wafer sales thanks to the early success of our new Digital and Emerging SOI products.

He added:"The 22 percent revenue increase at constant exchange rates that we recorded in the first quarter was in line with our expectations and paves the way for higher and more profitable growth, as we expect in fiscal year 2018 around 25 percent revenue growth at constant exchange rates and Electronics EBITDA margin to reach a minimum of 20 percent."

Communication and Power

In the first quarter of FY'18, demand for both RF-SOI and Power-SOI products continued to drive the sales of 200mm wafers, whilst the sales of RF 300mm wafers began to gain momentum.

The RF-SOI product line is dedicated to the ever-growing needs of smartphones. It has become the solution of choice for switch and antenna tuners, as it helps coping with the rising number of frequency bands and higher data speed requirements of mobile communications.

The Power-SOI substrates are dedicated to the manufacture of intelligent power conversion circuits that are widely used in the automotive industry, but also, increasingly, in industrial and consumer applications (including household appliances).

Digital

In the digital business unit, revenues have sharply increased in the first quarter of FY'18 compared to the first quarter of the previous year despite the decline in sales related to PD-SOI 300mm wafers (partially depleted silicon-on-insulator). This decline reflects the drop in demand for ASICs, servers and networking applications that already occurred in the course of the fiscal year 2017.

Sales of FD-SOI wafers (fully depleted silicon-on-insulator) for digital mobile and low power applications such as smartphones, automotive, consumer electronics and Internet-of-Things increased sharply from the first quarter of FY'17. They now include sales of wafers actually used in final products - not just wafers used for the qualification process between foundries and their fabless customers. During the first quarter of FY'18, more end-products based on the FD-SOI technology were already on the market, including connected watches, personal digital assistants and driver assistance systems.

In the meantime, Soitec enjoyed in the first quarter of FY'18 a high level of sales of SOI substrates for emerging applications, partly due to Silicon Photonics and even more so to Imagers. Indeed, Imager-SOI revenues recorded a strong growth in the first quarter of FY'18, driven in particular by the next generation of Image Sensors. Demand for Photonics-SOI is supported by the needs for optimizing data center transmission speed for applications hosted in the Cloud.

200mm wafer sales

Sales of 200mm wafers went up 6 percent at constant exchange rates in the first quarter of FY'18 compared with the first quarter of FY'17.

Demand for 200mm wafers remained strong and the increase in sales mainly reflects higher volumes of RF-SOI wafers. The Bernin I 200mm production site continued to operate at full capacity in the first quarter of FY'18. The volume increase essentially comes from the 200mm wafers produced by Simgui's manufacturing facility in Shanghai, using Soitec's proprietary Smart Cut technology. Simgui's site is fully qualified by Soitec key customers and additional production by Simgui will marginally help Soitec managing its worldwide manufacturing capacity to better meet market demand for 200mm SOI wafers.

On a sequential basis, sales of 200mm wafers raised by 1 percent at constant exchange rates compared to the fourth quarter of FY'17 thanks in particular to the additional volumes outsourced to Soitec's partner Simgui.

300mm wafer sales

Sales of 300mm wafers in the first quarter of FY'18 were up 80 percent at constant exchange rates compared with the first quarter of FY'17. This is the result of combination of: the confirmed decline of the PD-SOI product line;

a much higher level of sales of FD-SOI products; a sharp increase in Emerging SOI 300mm products for new digital applications, in particular in Imager-SOI;higher sales in RF 300mm wafers.

On a sequential basis, 300mm wafer sales of the first quarter of FY'18 were 2 percent higher at constant exchange rates than in the fourth quarter of FY'17. After the strong rebound experienced at the Bernin II 300mm production site in the third and fourth quarter of FY'17, volumes have only raised slightly. The capacity utilization rate reached around 30 percent in the first quarter of FY'18 and it is still expected to increase gradually throughout FY'18 and reach around 50 percent towards the end of FY'18 / early FY'19.

Royalties and intellectual property

Revenues from royalties and intellectual property (3 percent of total sales) reached €2.0 million in the first quarter of FY'18, compared with €1.4 million recorded in the first quarter of the previous fiscal year.

Capex plan

Since the beginning of FY'18, Soitec has been going ahead with the €40 million investment at Bernin II aimed at progressively increasing FD-SOI production capacity from 100,000 to 400,000 FD-SOI wafers (300mm) per year whilst Bernin II full capacity will remain at 650,000 wafers per year. The project is progressing well. As a reminder, these capex will be spread between FY'18 and FY'19.

On June 14th, 2017 Soitec announced its intention to reopen its 300mm facility in Singapore in order to address long-term demand for FD-SOI wafers.

Outlook

Soitec confirms expecting FY'18 sales to grow by around 25 percent at constant exchange rates and FY'18 Electronics EBITDA1 margin2 to reach a minimum of 20 percent.