By Ozan Ergenay and Paolo Laudani
(Reuters) – German silicon wafer group Siltronic expects sales to fall up to 19% this year due to weak demand from the semiconductor industry but plans to invest in expansion to prepare for a recovery.
The global tech industry has seen a big drop in demand since late 2022, as companies have cut back on tech products and services and consumers have less spare cash to spend on discretionary items due to high inflation.
Chief Executive Michael Heckmeier said he expected some relief in energy prices next year and saw strong customer interest for wafers from Siltronic’s new factory in Singapore.
There were promising prospects for strong medium- and long-term growth in view of several mega-trends, such as the macro-economic climate and customer interest, he said in an investor call.
The company’s Frankfurt-listed shares gained as much as 1.9%, recovering from losses earlier on Thursday.
Heckmeier said Siltronic was following the tussle between the United States and China for control of the chip industry and their mutual restrictions. He said the company was currently not concerned about China’s export curbs on rare earths.
“We only have very tiny amounts of these materials and secured sourcing from outside China already,” the CEO said.
Beijing announced export restrictions on some germanium and gallium products earlier this month, expected to be effective from August.
Siltronic’s product portfolio includes so-called Gallium Nitride-on-Silicon wafers, which enable high switching frequencies and efficient energy management, while working under high power densities.
The Munich-based company reported an 8.7% sales decrease for the second quarter, and guided for 2023 sales to fall 14%-19% from last year’s 1.81 billion euros.
Earnings before interest and tax (EBIT) came in at 70.3 million euros ($78.34 million) in the quarter.
Siltronic said it was preparing for its next growth phase by investing in its new Singapore factory, where it plans to produce state-of-the-art 300 mm wafers from 2024.
It now plans to invest 1.3 billion euros this year after previously guiding for investments slightly above last year’s 1.07 billion.
The new factory is expected to contribute to profit by 2025 the latest.
($1 = 0.8973 euros)
(Reporting by Ozan Ergenay and Paolo Laudani in Gdansk, editing by Kirsti Knolle and Jane Merriman)
