Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- X-FAB Silicon Foundries SE (XFABF, Financial) achieved a record high in the share of total revenues from core markets, including automotive, industrial, and medical sectors.
- The company reported strong quarterly bookings amounting to $248 million, up 12% year on year, indicating robust demand for its technologies.
- X-FAB's microsystems business showed strong growth with a 21% year-on-year increase in revenue, driven by next-generation automotive applications.
- The company maintains a strong cash position with $290.1 million in cash and cash equivalents, securing financing for ongoing capacity expansion programs.
- X-FAB continues to invest in expanding its 200-millimeter CMOS technology capacity, which is in high demand, ensuring long-term growth potential.
Negative Points
- Revenues for the second quarter were $205 million, down 9% year on year and 4% quarter on quarter, reflecting a decline in overall business performance.
- Silicon carbide revenue declined by 33% year on year, with the current weakness expected to bottom out in the third quarter.
- The industrial business revenue decreased by 33% year on year, impacted by weaknesses in 150-millimeter CMOS and silicon carbide technologies.
- Medical revenues fell by 18% year on year, affected by temporary allocation issues in CMOS capacities.
- The company adjusted its full-year revenue guidance downward, reflecting delayed recovery in the silicon carbide power device market.
Q & A Highlights
Q: Can you provide the loading by diameter for your CMOS technologies?
A: The 200-millimeter CMOS is fully loaded, and expansions are ongoing. The 150-millimeter CMOS has a lower loading rate of 50% to 60%, but this is improving with increased bookings, which should positively impact revenue in the fourth quarter. - Rudi De Winter, CEO
Q: What is the visibility on the recovery of the silicon carbide business, and what factors influenced the guidance cut?
A: Visibility on silicon carbide recovery is low, based on customer forecasts rather than tangible orders. The guidance cut is mainly due to silicon carbide market conditions and a slight reduction in demand for 0.35-micron products. - Rudi De Winter, CEO
Q: Can you update us on your CapEx budget for this year, especially with adjustments in Texas for silicon carbide?
A: The CapEx budget remains around $550 million for the year. Adjustments in Texas for silicon carbide are minor, as most CapEx is focused on 200-millimeter CMOS expansions. - Rudi De Winter, CEO
Q: How is cost inflation affecting your profitability, particularly regarding wafers and materials?
A: Positive developments in energy and material costs are expected to improve profitability, despite lower volumes. We are negotiating better prices for wafers and materials, which should benefit our cost structure. - Rudi De Winter, CEO
Q: Regarding the smart tech deal, what level of investment is X-FAB making to support this technology?
A: We have a consignment agreement and are working with a few customers to test and qualify the smart tech benefits for their products. - Rudi De Winter, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
