Company Reports

We are updating our view on Soitec after the company reported first-quarter results and gave an update on silicon photonics.

Soitec manufactures silicon-on-insulator and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and re-engineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radio frequency, and automotive applications.

Soitec delivered 25% sequential revenue growth in fourth-quarter fiscal 2026, beating its own 20% guidance. While the results came in ahead of guidance and the latter was constructive, we would expect more for a stock that has rallied 600% year to date from its recent lows.

Soitec manufactures silicon-on-insulator and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and re-engineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radio frequency, and automotive applications.

Soitec’s shares have risen 50% in the last five trading sessions as investors price in a bullish outlook for the firm’s silicon photonics segment. While silicon photonics demand looks strong, we remain cautious about incorporating the bull case blindly into our forecasts.

Soitec manufactures silicon-on-insulator and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and re-engineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radio frequency, and automotive applications.

Soitec exceeded third-quarter guidance, reporting EUR 160 million in revenue, an 18% sequential increase versus expectations of mid- to high-single-digit growth. This is a deviation from the trend of continuous disappointments over the last two years, but for now, it looks like a flash in the pan.

Soitec’s story continues to deteriorate and challenges keep intensifying. Shares are down 25% Nov. 20 after second-quarter fiscal-year results, with the stock down 70% year to date, reflecting a cyclical inventory correction and structural issues across product lines.

Soitec manufactures silicon-on-insulator and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and re-engineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radio frequency, and automotive applications.

Soitec heads into the next quarter of the calendar year in an environment of very high uncertainty. Management has guided for 50% sequential sales growth in the third calendar quarter, but overall sales levels remain very depressed after two profit warnings year to date.

Soitec manufactures silicon-on-insulator and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and re-engineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radio frequency, and automotive applications.

Soitec reported fiscal 2025 revenue of EUR 891 million in line with expectations, but launched a weak outlook for next quarter in what has become a spiral of guidance downgrades and resetting expectations.

Soitec manufactures silicon-on-insulator and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and re-engineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radio frequency, and automotive applications.

We are cutting Soitec’s fair value estimate to EUR 72 per share from EUR 150, as we cut our near- and long-term estimates after the company missed expectations once again and gave a very disappointing outlook for 2025 and 2026. Shares are down 30% on the news, which we see as justified. We are also increasing our Uncertainty Rating from High to Very High, as medium-term sales visibility remains at an all-time low.

Soitec manufactures silicon-on-insulator, or SOI, and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and reengineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radiofrequency, and automotive applications.

We maintain our EUR 150 fair value estimate for narrow-moat Soitec. We believe investors were anticipating Soitec would miss its guidance for the first half of the year, as shares jumped by 13% after the firm reached its own estimates. Second-quarter sales declined by 9% to EUR 124 million, a recovery from the 24% decline in the first quarter, leading to a blended 15% year-on-year decline in the first half of the year, in line with management’s targets. Management maintained its outlook for fiscal 2025, where it expects flat revenue growth compared with 2024 and a 35% EBITDA margin, in line with our estimates. This implies a strong sequential recovery of around 80% for the second half, compared with a very weak first half of the year, where the mobile segment should be the main driver. Although uncertainty remains given the weak semiconductor outlook—excluding artificial intelligence—the company is making good progress on its recovery. We see the shares as cheap, trading at 15 times and 11 times our estimated 2025 and 2026 earnings, respectively.

Soitec manufactures silicon-on-insulator, or SOI, and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and reengineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radiofrequency, and automotive applications.

We maintain our EUR 150 fair value estimate for narrow-moat Soitec after expected weak first-quarter results, which included a 24% decline in organic revenue year over year to EUR 120 million, its lowest level in four years. Although we expect this to be the bottom, investors in Soitec must be ready to stomach uncertainty over the coming quarters. Soitec requires an 85% sequential revenue growth rate in the second quarter to meet its guidance of a 15% sales decline in the first half of the year. This will require a strong triple-digit growth rate in the mobile division next quarter, with mobile revenue reaching at least EUR 120 million in our view. Soitec is perfectly capable of delivering this sales level, as revenue has been well above this threshold for most quarters in the past three years. However, mobile RF silicon-on-insulator wafer market sentiment is mixed with management commenting that while some customers are already replenishing their wafer inventory and placing new orders, others continue to deplete their excess inventories. Management maintains that revenue growth for RF-SOI wafers should rebound in the second half of the year. We see high uncertainty for Soitec in the near term even if the firm achieves a strong second quarter in line with guidance; it still needs 80% sequential revenue growth in the second half of the year to reach its flat year-over-year revenue outlook.

There were no big surprises in Soitec’s results, after the firm already made a sizable adjustment to its short- and midterm forecasts in late March. Sales came in at EUR 978 million, a 10% year-on-year decline. Despite the revenue pressure, the firm has managed to maintain a 34% EBITDA margin. We are maintaining our EUR 150 fair value estimate, with shares remaining undervalued. Soitec currently trades at 12 times and 9.5 times our expected 2025 and 2026 EBITDA.

Soitec manufactures silicon-on-insulator, or SOI, and other engineered wafers for the semiconductor industry. It buys plain silicon wafers and reengineers them, adding layers of materials to improve efficiency and reduce power consumption. Foundries like Samsung or GlobalFoundries use SOI as it allows them to produce more-efficient chips without the need for investing in smaller node sizes, hence saving money and reducing capital intensity. SOI is especially suitable for mobile, radiofrequency, and automotive applications.