Soitec: The end of the tunnel is getting closer for Soitec which is jumping on the stock market

(BFM Bourse) – The company specializing in semiconductor materials once again saw its turnover decline significantly in the second quarter, penalized by the weakness of the communications and automobile activities. But its dynamics are actually encouraging and the company has confirmed its annual objectives.

The best is yet to come for Soitec. The group specializing in semiconductor materials has suffered in recent quarters from the weakness of the automotive market which penalized its sales of “Power-FD-SOI” substrates.

These difficulties were coupled with a sluggish market for smartphones, which weighed down its RF-SOI materials, intended for radio-frequency chips. The group therefore faces significant stocks on these substrates.

Its turnover fell by 10% on a comparable basis in 2023-2024, then by another 24% over the first three months of the 2024-2025 financial year, ending next March.

However, the half-year results delivered Wednesday evening by the Isère company seem to show that the bottom of the wave has passed.

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Sequential rebound

From April to the end of September, the company recorded revenues of 338 million euros, down 15% on a like-for-like basis (excluding currency and scope effects). In the second quarter alone, turnover fell by 9%, however reflecting a sequential improvement compared to the first.

The slowdown in the automobile market further penalized the “automobiles and industries” segment where revenues fell by 11% on a like-for-like basis.

“Mobile communications” (57% of sales) for their part fell by 25%. “In a context characterized by the recovery of the smartphone market and the gradual reduction of inventory levels among Soitec customers, the volumes of RF-SOI wafers sold increased significantly compared to the low level of the first quarter of 2025 “, explains the company.

The Stifel bank highlights more precisely that, compared to the first quarter of the 2024-2025 financial year, sales in this segment increased by around 160% (48 million euros compared to 124 million euros). This marks “a significant improvement compared to the first quarter and which is linked to RF-SOI stocks at key customers”, appreciates the establishment. “We believe that Soitec has done the necessary work on its customers’ stocks,” he adds.

The “Edge & Cloud AI” segment (28% of turnover), intended for semiconductors for connected objects, data centers and 3D sensors, for its part saw its revenues jump by 66% on a comparable basis. This performance was notably driven by sales of Photonics-SOI substrates, which reflect “the need to have data centers that are both more powerful and more energy efficient to meet the exponential growth in computing capacity needs linked to artificial intelligence,” the company said.

Outlook confirmed

On other lines of accounts, gross operating income fell by 15% over the entire first half to reach 113 million euros. The corresponding margin stood at 33.4% compared to 33% a year earlier, a level which “impresses” Trion Reid, analyst at Berenberg. Free cash flow reached 35 million euros, an improvement of 120 million euros year-on-year.

Morgan Stanley notes that the group's results are in line with expectations. “Most importantly, the company maintained its guidance for the 2024-2025 financial year, which implies a limited upside compared to consensus, but is likely well above buy-side expectations (i.e. (say to simplify investors, Editor's note)”, adds the bank.

For the 2024-2025 financial year, Soitec still expects stable sales over one year on a comparable basis. Which therefore suggests a clear rebound in the second fiscal half-year. The group also plans to still generate a gross operating margin of around 35%.

On the Paris Stock Exchange, Soitec soared, gaining 12.6% around 10:30 a.m. and signing by far the largest increase in the SBF 120. Stifel confirmed its purchase advice and wonders if the group does not perceive “the light at the end of the tunnel.

“This publication is reassuring with an absence of profit warning (warning on results, Editor's note), despite the 40% drop in the stock price over the last three months, and the return to growth in turnover still envisaged in the second half (after 18 very difficult months)”, underlines Oddo BHF.

Return to growth in the next financial year?

Trion Reid judges that ultimately the group's trajectory “has not changed significantly since the first quarter announcement,” which should relieve a market which seemed worried due to Soitec's exposure to smartphones and the slowdown in the automobile industry.

The analyst also notes several reassuring elements delivered by the company's management during the conference call. “90% of the forecasted revenue for the 2024-2025 financial year is covered by the backlog and contracts, which is higher than last year's level of approximately 80%. Additionally, management indicated that the “Customer sentiment has improved, with further discussions regarding future capabilities and long-term agreements,” he said in a note.

Trion Reid also reports that while the automotive market will still remain weak in the second half of 2025, the smartphone market is expected to grow by around 3% in 2025, while the “Edge & Cloud AI” division will continue to benefit from the robustness of its markets. finals. The analyst concludes that the company is expected to return to growth in 2025-2026.

Note that Frédéric Lissalde was appointed chairman of the board of directors of Soitec from March 2025. “This was our best scenario in terms of governance after the departure of Eric Meurice. He has been a member of the board since July and brings notably expertise in the automotive sector (he will leave his position as CEO of the American equipment manufacturer Borgwarner in February)”, appreciates Oddo BHF.

Julien Marion – ©2024 BFM Bourse