A cautious tone into 2024

Despite the positive adjustments to the guidance, Spintronic adopted a cautious tone when is came to 2024. This was pretty consistent with what we had heard at Merck’s CMD a few days ago: nobody really knows when the inflection point will be. The Q3 figures missed our overly-optimistic estimates (EBITDA: -10.8%; net profit: -30.9%), while the consensus was beaten at all levels (EBITDA: +10.6%; net profit: +14.1%). We had foreseen a stronger Q3 and a weaker Q4.

Tick off 2023!

The management’s more detailed FY guidance has erased any remaining hope of a business recovery. It has flagged an even-stronger decline in profitability in the second semester, despite the continuation of stable sales prices. This indicates a pretty negative second halve yoy as well as sequentially. The main question is can the much weaker profitability be explained exclusively by lower volumes.

H2 recovery cancelled for Semis

Siltronic now sees no recovery in demand during the H2 2023. Customers are still in destocking mode, especially memory manufacturers. Compared with 2019, customers are requesting delayed volumes rather than lower prices as they fear that they will not be that well supplied once demand picks up. This is now expected to happen in (early?) 2024. The Q1 consensus was not available.

A stormy 2023?

Or just some clouds? Siltronic gave quite a negative 2023 outlook after it had to flag that some customers were asking for postponements just a few weeks after the release of the preliminary figures. Management made it pretty clear in the call that inventory correcting at memo players will take two to three quarters at a maximum. This view is supported by other players which are anticipating a pick-up in demand in H2, possibly right after the summer.

Hyper, hyper!

Siltronic AG (Siltronic) is all about purity being positioned at the second major step of the semiconductor value chain. The wafering business starts with chunks of polysilicon and ends up with hyper pure, hyper flat and hyper shiny wafers.

Morning Note – 22 April 2024

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