X-FAB Silicon Foundries SE, a leading provider of semiconductor manufacturing services, reported its Q2 2024 financial results on 25 July 2024. The company achieved revenues of $205 million, a 9% year-on-year decline and a 4% quarter-on-quarter decrease, in line with its previously announced guidance of $200 million to $210 million.
Strong Performance in Automotive and Industrial Markets
The core markets of automotive, industrial, and medical contributed $190 million to the total revenue, representing a record high share of the portfolio. While overall revenues were down 4% year-on-year, this segment demonstrated strong growth, driven by a significant increase in demand for 200-millimeter CMOS technologies.
X-FAB France played a key role in the automotive segment's success, with a 9% year-on-year increase in revenue, primarily attributed to the ramp-up of its popular 180-nanometer automotive technology.
Silicon Carbide Market Weakness
The silicon carbide (SiC) revenue for the second quarter declined by 33% year-on-year to $11.6 million, reflecting a slowdown in bookings after a weak first quarter. The company anticipates a bottoming out of the weakness in Q3, based on customer feedback, with a projected recovery commencing in Q4 and a return to robust growth in 2025.
150-Millimeter CMOS Segment
The CMOS business, totaling $166 million in the second quarter, experienced an 8% year-on-year decrease. This decline was primarily due to weak demand for 150-millimeter CMOS technologies, attributed to inventory corrections in the industrial end markets. However, order intake for this segment began to recover in the second quarter, setting the stage for a positive impact on revenue in Q4.
Other Business Segments
X-FAB Microsystems, specialising in automotive headlamp applications, recorded a strong 21% year-on-year growth in revenue, reaching $25 million. Medical revenues were down 18% year-on-year to $13 million, primarily due to the allocation of CMOS capacities. However, the company anticipates a return to solid growth in this segment based on new design wins, high demand applications, and strong medical bookings in the second quarter.
Robust Bookings and Backlog
Despite the challenges in certain segments, X-FAB recorded strong quarterly bookings, reaching $248 million, a 12% year-on-year increase. This positive trend reflects robust demand for 200-millimeter CMOS and microsystems technologies, coupled with an uptick in demand for 150-millimeter CMOS technologies, particularly in the industrial and medical end markets. The backlog at the end of Q2 stood at $270 million, compared to $220 million in Q1.
Financial Highlights
The company's EBITDA for the second quarter reached almost $48 million, representing an EBITDA margin of 23.3%. Excluding the positive impact of revenues recognized over time, the EBITDA margin stood at 22.7%, exceeding the guided range of 20% to 23%. The company's cash and cash equivalents at the end of Q2 remained strong, reaching $290.1 million.
Guidance and Outlook
For Q3 2024, X-FAB anticipates revenues within a range of $205 million to $215 million, with an EBITDA margin between 24% and 27%. The full-year revenue guidance was adjusted from $900 million to $970 million to $860 million to $880 million, reflecting the delayed recovery of the silicon carbide market. The full-year EBITDA guidance range was narrowed to 25% to 28%.
Capacity Expansion
X-FAB continued its capacity expansion programs in Q2, with total capital expenditure reaching $122 million. The construction of a new cleanroom facility in Sarawak, Malaysia, is on track, with equipment installation expected to commence in Q4. The company is also expanding capacity at X-FAB France, focusing on its 200-millimeter CMOS technologies. While the silicon carbide capacity expansion has slowed in response to the current market demand, the company remains confident in the long-term potential of the SiC market.
Conclusion
X-FAB's Q2 2024 results reflect the mixed market conditions currently prevalent in the semiconductor industry. The company's core business segments, automotive and industrial, continue to demonstrate strong performance, fueled by increased demand for 200-millimeter CMOS technologies. However, the silicon carbide market is facing a temporary downturn, impacting overall revenue growth.
Despite these challenges, X-FAB remains committed to its long-term growth strategy, with continued investment in capacity expansion and technology development. The company's leadership in critical technology areas like automotive, industrial, and medical, coupled with its strong financial position, positions it well for future success.
