Siltronic Ag Ord

Please stand by. Hello, everyone, and welcome to the presentation of Siltronics' full year 2025 results. Please note that this call is being recorded and streamed on Siltronics' website. The call will also be available as an on-demand version later today. Your participation in this call implies your consent with this. At this time, I would like to turn the conference over to Stephanie Margarita Senior Manager, Investor Relations at Siltronic. Please go ahead.

Thank you, Cynthia. Welcome, everybody, to our full year 2025 results presentation. This call will also be webcast live on Siltronic.com. A replay of the call will be available on our website shortly after the end of the call. Our CEO, Michael Heckmeyer, and our CFO, Claudia Schmitz, We'll give you an overview of our financials, the current market developments, and our guidance. After the presentation, we will be happy to take your questions. Please note that management comments during this call will include forward-looking statements that involve risks and uncertainties. For discussion of risk factors, I encourage you to review the safe harbor statement contained in today's press release and presentation. All documents relating to our full year 2025 reporting are available on our website. I now turn the call over to Michael for his view.

Thank you, Stephanie, and a warm welcome also from my side.

Let me start with the key messages of today's call. 2025 shows robust results in line with our guidance, even though the year was influenced by significant headwinds. notably FX effects, continued price pressure outside LTAs, and the closure of our SD business. Importantly, sales in 2025, excluding SD and FX effects, were on a prior year level, which highlights the resilience of our business. The momentum in Seltronic's end market developed stronger over the course of the year, resulting in a rebound in demand for 300 millimeter products. This is also consistent with the broader industry sentiment, where AI drive has been particularly strong in memory. However, it is important to note that DRAM chip revenue is currently still decoupled from memory wafer demand. This means that the AI-driven growth does not yet translate into a comparable uplift in wafer volumes.

Let me now give you a broad overview of our financial performance in 2025.

Claudia will then provide more details in just a moment, and at the end of the presentation, I will walk you through our 26 guidance. Sales came in at 1.35 billion euro, which is down 4.7% versus the prior year. Our profitability remained robust with an EBITDA margin of 23.5%. Both figures are in line with our guidance. The EBIT margin fell to minus 2%, coming from 8.9% in 2024. CapEx again remained significant, with a continuous focus on our new 300-millimeter FAB in Singapore. Compared with the previous year, however, we significantly reduced it to 369 million euro. Consequently, the net cash flow improved compared to the previous year, yet it was still negative at minus 85 million euro. Finally, net financial debt ended the year at 837 million euro, up from 734 million euro in 2024.

Let's move to the financials. Claudia, please. Thank you, Michael. a warm welcome from me as well.

I'm pleased to guide you through last year's results and highlight the key developments. Let's first take a closer look at our P&L for fiscal year 2025. Our performance came in fully in line with our guidance and was supported by a strong fourth quarter. Sales reached 1.35 billion euro, down 4.7% year on year. On the positive side, wafer volumes increased in 2025, reflecting the global end market growth and, with it, a clear pickup in demand for 300-millimeter wafers. The decline was mainly driven by FX movements, pricing pressure outside LTAs, product mix effects, and the shutdown of the small diameters line, which explains roughly one-third of the year-on-year change. Looking at the quarterly development, Q4 sales increased significantly compared to the soft Q3. This uplift was mainly driven by volume shifts from Q3 and early 2026 into Q4, as previously communicated. In line with the reduced sales level, EBITDA declined by 13% year-on-year to €317 million. However, we were able to mitigate part of the negative sales impact through targeted cost reduction measures and fixed cost dilution from higher wafer volumes. The EBITDA margin amounted to 23.5%, a solid result considering the challenging environment. It underlines our cost discipline throughout the year. EBITDA in Q4 increased by 31% quarter-on-quarter to €86 million, driven by the higher sales level and the resulting positive ethics cost dilution. Bollier EBIT came in at minus €26 million, corresponding to an EBIT margin of minus 2%. Besides the lower EBITDA, A key driver was the start of depreciation of major assets of the New Singapore Fed beginning in August 2025. This also impacted Q4 EBIT significantly, amounting to minus 34 million euro. Net income for the year was minus 78 million euro. In addition to the development of EBIT, rising interest expenses weighed on the financial result, reflecting the higher debt level. We also recorded a non-cash effect in Q4 from the revaluation of deferred tax assets, which had an impact on our tax result. As Michael mentioned, excluding the SD and FX effects, sales in 25 were essentially in line with the prior year. This is a very positive message, underscoring the resilience of our underlying business, despite the challenging environment. As you know, Siltronic is significantly exposed to changes of the US dollar versus Euro. Over the course of the year, we faced notable FX headwinds as the dollar weakened to an average rate of 1.13 in 2025 compared to 1.08 in 24. Regarding VSD closure, as communicated, the shutdown impact our top line in the low single-digit percentage range. This is illustrated in the bridge shown on this slide and is one of the key drivers of the year-over-year change in reported sales. Since we shut down the line in mid-25, the effect is concentrated in the second half of the year. As a result, 26 will capture the full year impact of the FD closure for the first time. Let me elaborate on FX as it remains a key factor for Sotronic. As you can see on the left, our business is highly exposed to the US dollar. In 2025, more than 80% of our sales were effectively US dollar linked, while most of our cost base is Euro denominated. This explains why we are so sensitive to any exchange rate movements. To give you a sense of the magnitude, Based on our 25 exposure and the Euro-US dollar FX rate of 1.13, a change of one US dollar cent would impact our full year sales by around 10 million euro and our EBITDA by around 7 million euro before hedging. To manage this exposure, we apply a structured hedging approach. We combine operational and strategic programs, gradually hedging our expected net FX exposure up to 18 months ahead. This reduces volatility, even though larger and more persistent currency movements cannot be fully offset. Let's turn to the balance sheet, which continues to show a solid and healthy structure. At the end of 25, total assets stood at 4.8 billion euro, down 6% year on year. Property plant and equipment totaled €3.5 billion. We saw a reduction of around €140 million in this position, largely due to the Singapore dollar's depreciation. Working capital remained broadly unchanged. A decrease in trade payables was largely offset by a decrease in trade receivables and inventories. Operational cash inflows combined with a partial drawdown of our syndicated loan in Q2 did not fully cover capex payments and debt repayment. Consequently, cash and securities declined by approximately €130 million to €531 million, while financial liabilities decreased by €35 million. Finally, our equity ratio remained stable at a healthy level of 43%. As you can see, our capex has been significantly scaled back since the peak in 23, totaling €369 million in 2025. At the same time, cash payments for capital expenditures amounted to €380 million, slightly exceeding the invest level. Timing differences between capex and payments are influenced by factors such as the timing of asset additions during the year, completion of construction phases, or specific payment terms, effects we have seen very prominently in previous years. By the end of 2025, trade payables related to capex remained well above normal levels, driven by these timing differences. We expect this position to normalize in 2026, which will result in the corresponding cash outflows for past investments. At the same time, we will continue at a significantly lower investment level as reflected in our 2026 guidance. Let's now turn to net financial debt and the factors driving the year-on-year development. As shown on this slide, net financial debt increased from 734 million euro at year end 2024 to 837 million euro at year end 2025, a change of 103 million euro. We generated a solid operating cash flow underpinned by an exceptionally strong fourth quarter. This performance was shaped by two key factors. Firstly, the high revenue level in Q4 And secondly, favorable working capital movements that provided an additional uplift to our cash generation. However, even net of the 38 million euros received in Q4 as the final tranche of the FabNext investment grant, CapEx payments clearly exceeded the operating cash flow level in 2025. Let me also provide a brief outlook on 2026 at this point. We expect a temporary unpronounced increase in net financial debt in the first half of the year, primarily driven by capex payments and working capital effects. Most notably is the substantial cash outflow related to the settlement of the capex-related trade tables described earlier. In addition, we anticipate an increase in day sales outstanding, temporarily tying up more cash. From this elevated starting position, net financial debt is expected to decline in the second half of the year. Let me also briefly touch on the composition of our financial debt. At year end, total debt stood at nearly 1.5 billion euro, of which around 130 million euro remained undrawn. The maturity profile shown on the right illustrates that repayments are well spread over the coming years. For 2026, we expect repayments of around €100 million, and interest expenses are anticipated in the ballpark of €50 million. As previously mentioned, we closed the 2025 financial year with around €530 million in cash and securities. Together with the undrawn revolving credit facility, This gives us solid financial flexibility. In addition, our balance sheet includes short-term prepayments of around 10 million euros, which we anticipate being returned in 2026. This figure is now markedly lower than previously expected as a result of agreements with customers to defer certain refunds.

With that, let me hand it back to Michael. Thank you, Claudia. Before we turn to our outlook for 2026, allow me to make a general remark.

Our expectations for this year reflect the market conditions currently visible. They do not include any additional impacts from a further escalation or continuation of the ongoing war in Iran.

Right now, we do not see a meaningful immediate impact, but are closely monitoring the situation. Let me summarize what we currently anticipate across end markets in 2026.

Overall, the outlook is positive. On a pre-inventory basis, we expect the wafer area consumption to increase by around 6% year over year in 2026, with servers clearly being the primary driver. After a very strong 2025, Server-related demand is expected to continue growth, supported by ongoing AI investment and data center expansion. AI is pushing memory prices up, while at the same time, memory supply remains tight. This implies that capacity is being prioritized for AI-related demand, which is limiting unit volumes available for other end markets. Consequently, There will be a dampening demand effect for PCs and smartphones this year, especially in the lower-end segments, which typically rely more on legacy devices and components. In addition, it's not surprising that 200mm remains challenging, since inventories in some areas of the power supply chain are significantly elevated.

We expect an almost flat issue in the automotive sector, while the industry segment should resume growth.

Let me provide some content on the memory segment, which is the current hot topic and is often discussed as the key beneficiary of the current AI momentum. As the chart shows, DRAM chip revenue is expected to grow significantly in 2026, even though demand for DRAM wafers is projected to rise by a much smaller rate of 6% to 7%. Let me explain the major parts of this difference. First, the most important drivers are price and mix effects, reducing the original growth rate by more than half. With supply remaining tight, memory chip pricing has increased significantly, and the product mix has shifted towards higher priced products, such as HBM. Consequently, revenue growth is huge even without a comparable increase in unit volumes. with an increase in bits per wafer, which means customers can produce devices that store more data per chip without increasing wafer starts. Technological progress and higher density mean that the larger bit shipment does not require the same increase in wafer starts. As previously mentioned, memory FAB capacity is essentially fully booked for 2026, as illustrated by the red arrow in the graph. Additional capacity, which many customers already announced, will take time to ramp and will not significantly affect the 2026 output. And third, we still see a small inventory normalization in parts of the supply chain that continues to absorb some of the volume uplift. These three effects help explain how this very strong DRAM chip revenue growth translates into mid-single digit increase in demand for DRAM wafers. Coming back to the limited memory FAB capacity, bringing new capacity on-stream takes time, typically around one to three years. Overall, the mid to long-term outlook remains positive. Higher AI capex should increasingly support wafer demand as investments in memory and leading edge are expected to expand capacity.

Let's take a look at the key factors that will influence our performance in 2026.

Starting with volume, we expect growth to continue, driven mainly by 300 millimeter, where demand and loading is picking up further. On the other hand, we see continued weakness in 200 millimeter, primarily because the power segment still has high inventories and is suffering from some end market weakness. This will clearly impact the 200 millimeter wafer business in 2026. Regarding pricing, we see continuous price pressure outside our LTAs, especially for 200 millimeter products, while in 300 millimeter, we see first reasonable spot prices. Regarding FX, the impact remains substantial given our US dollar exposure. For 2026, based on our FX assumption, we expect the translation effect to be broadly similar to the prior year level, meaning FX remains a relevant headwind. Additionally, please keep in mind that the SD line closure will impact sales for the entire year for the first time. Putting this together, we expect sales in 26 to be at prior year level, excluding SD and FX effects, while the reported year-on-year development is expected to be in the mid single-digit percentage range below the previous year. Let me briefly outline how we will continue to manage the headwinds in 26 with a clear focus on capex, costs, and cash. Firstly, we will maintain strict capex discipline. After the peak investment phase, we are running at a significantly lower investment level and continue to be very selective on new project approvals. We prioritize only those projects that are essential and fully aligned with our strategic roadmap. and continue to invest in maintenance capability and innovation. Secondly, we will continue our full-score cost program, addressing all major cost drivers across the organization. The objective is to further improve efficiency and secure substantial savings, while further developing our technical capabilities and our customer service level. Thirdly, we keep a strong focus on other cash measures In particular, a comprehensive working capital management. Overall, these measures are designed to strengthen our financial resilience and support our flexibility in 2026.

As previously mentioned, we expect the market environment to remain challenging.

Against this backdrop, we guide for sales in 2026 in the mid-single-digit percentage range below 25. based on the Euro-US dollar exchange rate assumption of 1.118. On a comparable basis, meaning excluding FX effects and DSD line closure, we expect sales to be around the prior year level. For profitability, we guide for an APTA margin between 20% and 24%. We also expect a soft start into the year below average regarding sales and APTA margin. Depreciation is expected to increase significantly in 26 due to our investments in the 300 millimeter business. We already indicated this development in previous communications. Most of the increase stems from our 300 millimeter operations in Singapore. In addition, our depreciation periods are in general comparatively short, which leads to a higher annual depreciation charge. We guide regular depreciation between 490 and 520 million euro And therefore, EBIT is expected to be significantly below the previous year. Turning to investments, we expect capex between 180 and 220 million euro. As explained before by Claudia, cash payments for capex are expected to exceed this level.

Thus, we expect net cash flow to be in the range of the previous year. Already during our Q3 conference call in October, I presented a version of this slide.

Since then, the list of awards has grown even further. It now also includes recognitions from Micron and ST. These additions underscore how broadly our customer base acknowledges our performance. The awards are a strong validation of our technological leadership, our operational excellence, and our reliability as a long-term partner. Strong customer proximity not only reinforces our position as a trusted partner, but also helps us deliver solid results in challenging market environments. And with this, we conclude our fiscal year 25 results presentation. And Claudia and I are happy to take your questions. Thank you very much for your attention. Cynthia, please open the Q&A.

Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure the mute function off to allow the signal to reach our equipment. Again, press star 1 to ask a question. We'll pause for a moment to allow everyone the opportunity to signal for questions. The first question comes from Harry Blakelock with UBS. Please go ahead.

Good morning. Thanks very much for taking my questions. The first is just around the prepayments. And you mentioned that customers have allowed you to push back prepayment refunds. And it looks like they've been pushed back quite a few years with around 300 million being pushed out beyond five years. I'm wondering whether you could give some color on that. Is there anything to read from that on

your view, your assessment on kind of midterm demand. Thank you, Harry.

And of course, as we highlighted with our last chart, we are very close and let's say very successful with our customers these days. And with some of them, we had those conversations. As you remember, LTA's volumes sometimes have been pushed out to later times. And in exchange, so to say, we agreed with certain customers also to push out repayments of the prepayments for a certain period of time. For confidentiality reasons, we cannot tell you a great deal of details around the timeframe. But obviously, you see it's a quite nice effect for the year 26, where initial assumptions have been significantly above the number of 10 million, which we report today.

Got it. Makes sense. And then maybe one for Claudia, just around the 2027-28 maturities. um seems like the the under on sin loan will probably be used for the 26 maturities and then you're pretty close to the the 500 million that you've said you'd want to maintain just the 500 million cash balance that you want to maintain for for running the business um so it'd be great to hear just what's what's the current plan to address those 27 28 maturities

Hi Harry, good morning.

Yeah, it's clear that and we also stressed it a bit that we start to refinance those maturities in 2027 and beyond that already in 2026. So we are just evaluating the options. We have not made any decisions yet on the instrument or so or the amount, but of course we are evaluating the options.

Okay, got it.

Thanks, Claudia. Thanks, Michael. Thank you. Thank you.

The next question comes from Constantine Hessa with Jefferies. Please go ahead.

Good morning. Thank you so much for taking my questions. I've got a few, so let me start with the first one. Michael, I'm just trying to not get confused anymore around what leading edge really means. The CEO of Sumco was quoted on their call saying that there are only two players in leading edge, i.e. he was referring to Shinetsu and Sumco. And obviously, you know, Siltronic has obviously been saying for a long time that you guys are also leading edge. So can you maybe give a bit of color on, or maybe just get rid of this confusion on, are you just leading edge in memory, not in logic? What exactly is...

Just trying to get rid of this confusion, where exactly is the difference here?

Yeah, thank you, Konstantin.

You are right, there are indeed kind of multiple leading-edge definitions around Some, let's say, smaller ones are referencing to leading edge as not just being smaller than five nanometer in logic only. Some would cover even some advanced memory, which I think is a wrong definition. The statement I want to make, no matter which definition, we are a qualified leading edge player, regardless of the definition, regardless of the scope of only logic or memory, we qualified with supplying and commercializing leading edge products into all major leading edge players, no matter which definition you take.

So by that you mean all definitions in logic and memory. So you're literally at par with Sumuko and Shinetsu and what the CEO said on his call was wrong.

So I don't reference to a competitor statement. I can only say we are a widely adopted leading edge player and commercializing leading edge products independent of even the detailed definition. Okay.

It's a little bit confusing, but okay. The question number two is just on the operating business. Some of your peers have started announcing some business restructuring measures for 200 millimeter. Are you potentially taking any initiatives in 200 as well, given the weak demand environment? And for 300, I found this actually quite interesting. One of your peers said that their new greenfield 300 millimeter will be fully utilized by the end of 26. So how should we think about your new Singapore fab? Are you basically also pretty close to utilize by the end of 26, and that would mean additional capex?

So thank you, Konstantin.

With regards to 200 millimeter, I think you're right. Our peers highlight this for quite some time that the business is under pressure. We also said very clearly that it's the one that's got the most pricing pressure. um we do not have any decision taking or any plans for restructuring or consolidation of whatever nature but we also monitoring the situation very carefully and we also listen of course to our peers being extremely vocal around this which we are currently uh not yeah but of course we also anticipating uh 200 minutes of being under some continued pressure also going into 2026 as we explained in the presentation. With regards to 300 millimeter, as you know, we are in the middle of the ramp of our Singapore FAB. We do not see an urgent need to add additional capex while even some capex pending and from old orders is coming into our FAB. So there's, let's say, capacity room in the existing framework. And then in due time, of course, with UTs further going up, We will watch when we have to take the next step. Currently, we feel well prepared and set up for the demand that has been coming last year and is announced for this year. And then it's a watch case for us. It's kind of a modular situation where we're in a comfortable position. The shell, clean room, and all the infrastructure sits there. And we can then relatively smoothly ramp more capacity as needed. Currently, we feel fine with what we have and what we have planned.

Michael, can I just point on CapEx? With demand running the way it is, when would you potentially expect to have to start investing more into CapEx again to continue building out that FAB?

We don't see it yet, because as you know, our FAB in Singapore is not a small one.

We always said it's going to ramp over multiple years, five years, four years was a number we gave out. With demand, as we see today, again, we are in a comfortable position. We can follow the demand easily. We have the privilege that now all major customers are qualified in our new FAB. So we can work with this and also move volumes between our existing FABs and the new FAB. And then we would take a decision at the appropriate timing, which we currently do not see yet.

Okay, thanks. And last question is, Claudia, a quick question on the balance sheet. I think you mentioned that you expect a decline in net debt from the second half of 26. So is it fair to say that net debt peaks in 26? And yeah, that's it.

Thanks.

Yeah, I don't want to speak forever, but regarding 2026, we expected, as I mentioned, a clear increase in net debt in the first half and a clear decrease in the second half of the year. But that is planned, that is on purpose, and that's how we see the net debt to evolve over 2026.

I meant rather if we look at over the next three years now with the development around cash, is it fair to say that we peak here, or could we?

Yeah, of course, depending on the market development. But right now we see a market loading increasing in 300 millimeter, and this gives us quite a confidence for the future. We always have confidence in our future, but right now it's getting better. And with that, Yeah, I can't promise, but first half of 2026 will be a peak.

That's great. Thank you so much.

The next question comes from Martin Youngflash with BNP Paribas. Please go ahead.

Yeah, hi. Good morning. Thanks for taking my questions. I also have a few. Maybe starting with 300 millimeter pricing, in your prepared remarks, we're talking about in 300 millimeter you're seeing first reasonable spot prices so just to clarify what that means and given that 300 millimeter utilization rate should be improving gradually would you see some room for price increases perhaps for some of your memory customers by the second half that's the first question yeah thank you martin and

Let me frame this a little bit. All what we said around pricing remains valid. So first of all, two-thirds of our business is in LTAs, and in LTAs, pricing is contracted. So no change there. Secondly, price pressure outside LTAs is continuing and is in place. and it's particularly pronounced in 200 millimeter that's what we always said the lower the diameter the larger the price pressure and now let's say the new fit of information we give out today is that we see for the first time first examples with reasonable spot prices in 300 millimeter i i would not speculate today more but it's a first new bit of information which we want to give today

so it's more like a stabilization and then increase um okay and then uh vice versa on the on 200 millimeter i mean you said you did an lta like but um in new contracts that you are signing um is there still incremental price pressure or is that is the price pressure that you are putting into the guidance for this year is that mainly like a rollover effect from last year

I mean, I hope you understand we cannot be too specific about new LTAs and pricing rollover and new effect. What I can say is we always have the freedom. If LTA conditions are not attractive, we don't have to sign, right? So in terms of LTA closing, new LTAs, we would only do it if it really makes sense, also price-wise. And 200 millimeter is under pressure

uh that's a fact we have to accommodate in the future business development okay thank you and then my um final question is just on the input cost i mean um you're expanding in singapore singapore relies quite heavily on natural gas for power generation um just what's your view there on like any impacts like you have any um hedges in place and maybe also on the other side um if you see any impacts on availability of industrial gases, for instance, that you're using in the EPI process, like helium, et cetera, from the conflict in Iran?

Yeah, right now, we do not see any immediate impacts, which should concern us. So the supply chain is intact. And regarding prices, we have hedging in place, not only in Singapore, but also in Germany. So on the energy side, we feel quite comfortable. And please, I would like to remind you that energy is in our cost position number five or so. So yes, we are energy intense, but it's not that we heavily rely on energy prices. Of course, it's not nice if they are rising, but as I mentioned, we have hedging in place, and this should protect us from major negative impacts. Okay, and then on the gases? Same thing for gases. The supply chain is intact, so we do not have an impact here right now, and we do not foresee it right now.

Great, thanks a lot.

The next question comes from Robert Sanders with Deutsche Bank. Please go ahead.

Yeah, hi. Good morning. Thanks for taking my question. Can you just talk a bit more about the gap between spot and contract? It looks like spot's slightly improving, but what's the percentage delta today? And are customers, in light of longer lead times generally across the industry, looking to perhaps sign more contracts going forward? Or how do you think about that 2 thirds percentage? I have a few follow ups. Thanks.

Hi, Rob. Thank you very much for your question.

I think you will understand that we cannot talk about percentage gaps or great details there. However, yes, loading in 300 millimeter is increasing, did increase already last year, is continuing to increase this year. And that might give more opportunities. We see some customers considering their strategic 300 millimeter supply in more, let's say, detail. So it's a good and positive dynamics for the wafer industry.

Got it. And in FABnext, what are you actually doing right now? Have you stopped hiring? Are you kind of pausing the FAB? I mean, I think you've got 200K, which is only 20% of the feasible capacity. So where are you at in terms of getting that to scale, given that your CapEx guide is pretty low compared to the recent history?

Thanks. Yeah, I think we never talked about 200 or whatever in great detail. But We continue ramping. As I said, we are now since mid of the year where we announced that major customers are qualified. We continuously ramp volume with these customers. We have from the first wave of investment quite some space of capacity there. And that is being ramped, of course, in synchronization, as we always said, with our existing 300-minute footprint in Germany. And then in due time, when we feel demand is getting to the capacity limit, which currently is not obviously seen nearby, we would then bring more equipment into the FAP. So I think it's a comfortable position. We can follow the demand. And currently, it's running very smoothly in ramping the FAP.

Just last question. Have you actually reached cash margin parity in Singapore versus Berghausen? I guess the reason I'm asking is, you know, you have more alternation in Singapore, but you probably have lower fixed cash cost amortization. So I'm just interested whether you've reached cash cost margin parity.

Let me put it like that. Break-even always depends on how you allocate to the FAB. So this is one of our Central activities that we do here, we allocate the volume where it's most reasonable. So we do not comment on break even points of certain FABs or specific FABs. But what I can say is that last year we talked a lot about rent cost in FABnext and that they put a burden on our P&L. Perhaps you've heard that I have not mentioned it yet, not because they vanish, but they dilute more and more. So, with the volume that we bring in ZEPP Next and with the ramp there, we see a clear fixed cost dilution there, and profitability there is getting better and better. So, we are very happy with the development of profitability in the new ZEPP, which is together with SSW, one company.

So, it's, we are, we are, yeah, as I said, we are happy with the development there.

Great. Thank you so much.

The next question comes from Mason Thompson with Nankos Metzler. Please go ahead.

Yeah, hi. A few questions. The first one on the LTA topic, do you face any LTA cliffs in 2026 or any contracts that run out?

So thank you, Mason. We do not indeed see an LTA cliff.

And during the course of 26, no major LTA will expire. I think we mentioned that already previously. And we look at LTA as a kind of portfolio. Sometimes one goes, one comes. There's LTA opportunities always, even in market down situations. We said roughly we want to have two-thirds of our business in LTAs. That's not written in stone, but it's a, let's say, a rough framework for us. And, of course, we highlighted particularly around our FAP in Singapore, 80% of the business there is in LTAs that also correspond to those prepayments, which have been discussed earlier today already.

Got it. And then the second question, just trying to understand your top line guidance a little bit better. So at mid single digit decline, that means your sales will be roughly down 70 million. 113 FX in average 2025 versus your guidance 118, which means we have 50 million FX that went there. So, then you expect the volume growth of 5 to 6%, at least the market volume growth. And then you have the small diameter business. Can you quantify that? What was the first half of 2025? So, which basically I'm trying to understand. How much price or product mix impact do you anticipate here in your guidance, particularly if two-thirds of the business is LTA and the ASPs are quite stable there?

I think, thank you, Mason, for this question.

I think we were pretty clear on one of our charts that without the SD and the FX effect, we would be on previous year level. So that means, roughly speaking, volume, price, and mix are compensating each other. I'm a bit reluctant to comment on your volume assumption. We would then go into very details of market share developments, et cetera. But you can assume that volume, price, and mix are a zero gain, so to say.

Got it. So and it will be probably more the product mix, right? So higher non-polished wafers in 300 millimeter and some price decline in 200 millimeter, probably, right?

I mean, we're also a bit reluctant to comment, but as we talk repeatedly about advanced specifications leading edge advanced memory being fully loaded, you can kind of derive, yes, it's more the Got it.

And then another question regarding the, that was one of the previous questions already touching the leading edge topic. Or ask differently, if you are qualified for the really bleeding edge nodes, And like TSMC, they build initial capacity for bleeding edge when they go to two nanometer manufacturing node. But later, they add more capacities as they move volumes to this bleeding edge, which then becomes kind of bleeding or not bleeding edge node at a certain point after one, two years. Can you say that you keep your market share stable when this happens? I mean, when TSMC adds more capacities to the former bleeding edge node and they expand the capacities, you still keep your market share stable versus when you initially qualified at this bleeding edge?

Yeah, thank you, Mason. I'm not sure whether I got the question exactly.

What I can say is the following. One of our strategic focus area has been communicated is, of course, we are wannabe and we are technology leader and that particularly focus on leading edge and advanced specifications. So we have, according to our, let's say, analysis in this advanced specification, we have above average market share. And if this segment is growing faster than legacy, which needs to be proven, because legacy also is growing significantly, then the share would grow correspondingly. On the other side, we have to be aware that all those advanced specifications, particularly leading edge, when you have a capacity of a certain amount for legacy nodes and you convert it, to leading edge, then less waivers are needed in the same capacity as processing is needing more time. And waivers, so to say, are circling longer in the manufacturing footprint. So therefore, there is also a kind of compensating effect. And then with new capacity, As you hinted and as we also showed for the DRAM memory, then of course that effect would be also overcompensated again. So there are multiple things coming into play, but for sure leading edge is very attractive for us and it's one of our key focus areas.

got it and then the final question on the 200 millimeter I think your competitor one of your competitors said yesterday a little bit around comments around 200 millimeter that they expect the peak of inventories behind that them a mild recovery do you do you see any level of inventories in the industry particularly in the auto where we can assume a new inflection point in terms of wafer starts and for your wafer demand?

So we see still, particularly in the power and industry segment, we see significantly elevated inventories. That overproportional effects the 200 millimeter business. And maybe just a note of caution, if some of our peers talk about 200 millimeter, they sometimes include statements around gallium nitride or SOI technologies, which we are not pursuing. So therefore, statements around inventories can differ whether the scope is more general or whether the scope is focused on silicon.

And that's what we are doing. OK, thank you.

The next question comes from Gustav Froberg with Berenberg. Please go ahead.

Good morning. Thank you for taking my questions as well. Just a quick one on DRAM, actually, just on the slide that you showed in terms of, I guess, bit growth and bit density and how it impacts wafer demand. Do you see that the current state of I guess technological advancement means that there is a bigger drag on wafer demand today versus previous shifts in technology. And as a follow-up to that, I mean, does this mean then that with this going on and if the answer is yes to question one, that we should expect the wafer market to take longer to reach the sort of levels of previous years when it comes to shipments?

Thank you. Thank you, Gustav.

I think we would look at this more as a continuous development. It's not kind of over-proportionally or even exponentially growing in terms of drag, as you call it. We also know, of course, that customers are reacting already to this. You know, maybe also the CapEx and the project roadmaps of the big, particularly memory projects. And then once they launch, of course, it's also a ramp for the waivers, which, to be honest, is sometimes even a bit ahead of time as it starts already with first test and monitor waivers and those kind of activities. So therefore, I don't think there will be particular, let's say, delaying effects, as your question stipulates, from this bit growth.

Okay, super. Thank you.

The next question comes from Daniel Shafiq with Citi. Please go ahead.

Hi. Good morning. Thank you for taking my questions as well.

Basically, I just wanted to ask a few market assumption questions. First one being on your slide, I'm seeing that you're seeing smartphones, the end market being volumes being down 2%. With now the kind of quarter being done in a lot of the smartphone players talking about kind of volumes dropping, let's say 5% to 10% or even worse. Could you explain a bit what your assumptions are for this kind of That would be great to understand. And then also the second question would be also on market share. Just coming back to that, before you were usually stating stable market share and kind of that this is among the four big players, right? I'm just wondering, are you still kind of, when you're stating market share, is that still among the four players? Or are you also now kind of factoring in China, within that, and yes, sure, I understand they're maybe not in the very leading edge 300 millimeter, but they are adding capacity, and that is a potential risk down the line as well.

So I'm just trying to understand how you see your share there as well. Thank you.

Thank you, Daniel. To your first question with regards to smartphones, I mean, our numbers we're communicating is, as we said, it's prior to all potential, let's call it, effect. When you look at those numbers sometimes being communicated, which are significantly pointing negative, Let's make sure we don't mess up quarterly communications with full year communications. That would be my first point. But what we see is definitely that the kind of effect from the memory shortage and all the, not all, but even parts of the available memory chips, particularly in the high end, all go into the AI segment, which continues growth. And that leads to a certain shortage into the smartphone. Will it become worse over the year? To be honest, we don't know. We said clearly we will report when we have, let's say, more visibility, what happens in the Near East, and whether that would also affect the overall, let's say, market sentiment. We will most likely come up with an update of the model in our next our next call but we are aware of those let's say announcements that are a bit more more negative on the other side there are also some more positive on the industry around here so for the time being we we feel that the assumptions here are well set but you're right it's a kind of watch case for the course of the year with regards to your market share question uh There are not four or five players or even one more here and there reporting into this semi-organization. And this is the space where we have a lot of precision, a lot of detail because all the players reporting here on a monthly basis. And we know very well and very precisely what is going up, what is going down. And in this space, we are moving in a good direction. We also, of course, look at the total situation, including China. Sometimes the information around China is a bit more, let's say, foggy and assumption-based. But what we see, of course, yes, there are capacities being added continuously. the Chinese wafer manufacturers develop. They keep developing technology and quality. For the time being, they are focusing extremely on the local-to-local supply chain model, which is also supported by the China Five Years Plan. And we also see that their ability is still, you know, not in a situation where they can do anything, what we would call leading edge or advanced memory. But this is a watch case going forward. On the other side, we see also companies like TSMC having announced they want to be less dependent on China supply for, let's say, geopolitical reasons. We see the China chip industry be burdened by some bans on the chip side, so they do not get advanced ASML machines, et cetera. That means there's a certain burden to develop those leading edge and advanced technologies on the chip side in China, which is also a burden, of course, to develop, let's say, advanced specifications for the wafer manufacturers in China. So it's a complex game for us. It's a watch case. We also, of course, are doing business in China, as you know, and our share of the business comprising what we call Greater China. So that's The People Republic of China and Taiwan did slightly increase when you study our annual report in 26 versus 25 versus 24.

Thank you.

And if I may slip also in a modeling question for Claudia. Just to quickly understand, a year ago or so, you've mentioned that maintenance CapEx is around 200 million. Now you're guiding to 180 million at the low end. Just trying to understand, did things shift? Is now kind of maintenance capex more something like 160 million? Or yeah, could you just give us a bit more color on that? That would be great.

Yeah, we guided 180 to 220 million euro for capex. And yes, we said 200 million euro steady state capex. on average over five years, with some years being lower or higher. So this year is obviously lower than 200 million. But we cannot disclose any further details on how much the maintenance capex. By the way, our steady state capex is not just maintenance, it's also capability and cost position or product mix capex. But we cannot disclose the exact amount this year. But obviously, it's lower than the average of 200 million that we stated for. steady state topics.

Perfect. Thank you very much.

The next question, a follow-up question, comes from Constantine Hessel with Jefferies. Please go ahead.

Thank you. Just a very quick follow-up. Claudia, I'm over to you quickly on the refinancing. I mean, you're obviously looking at instruments and magnitude, but looking at the payback that you have to do in $26 of $100 million and your cash buffer running close to the $500 million as previously pointed to, I just want to say, can you comfortably say that refinancing these, given the current financial situation of the company, that you would potentially be able to keep interest rates in place, or would you expect interest rates to worsen? And as a result, would you consider equity options instead?

One general remark up front. You mentioned 500 million euro to be our cash buffer. We always said that we have no fixed amount. Our cash buffer always depends on the assumed cash outflow for cost and invest. And we want to make sure that liquidity covers several months of payouts for cash. cash cost and invest. So, 500 is not a fixed number that we have, as a general remark. And regarding interest rates, when we do financing, yeah, that heavily depends on the instrument that you take. So, for example, a convertible, for example, is much lower in interest rates compared to term loans. It's not clear yet which interest rate we will achieve when we do the refinancing. And regarding your question about capital increase, there are no specific plans to do a capital increase right now.

Sounds good. Thank you.

The next question, a follow-up question, comes from Mason Thompson with Bank Haas Metzler. Please go ahead.

Yes, Veysel Tazi here again. Just a quick follow-up on the memory and on your slide 14. I was just wondering if I got that correct. So you basically mentioned that the new capacities which memory vendors are planning till first, very first hit the market or you see the demand, it will take one to three years. And I was wondering, If I got that correct and why this assumption, I mean, if I'm correct, 2024, all the memory vendors have converted their spare capacity to server level DRAM. So using that basically as HPM. memory. And now they are all fully utilized, fully booked out. And we have seen in Q4 that all those guys are accelerating their CapEx plans. And historically, it took around six to nine months, particularly when customers are double ordering, there was always an incentive to bring capacities much faster online to grab market share or volumes. Why would that be one, two, three years this time?

No, thank you, Mason.

I mean, one to three years always starts the question, when does one to three years start? We were not very precise around this. Yes, CAPEX roadmaps have been again accelerated, but you have to have in mind that the ministry also pulled a break not so long ago. Construction progress was interrupted and now is resuming and maybe it's also accelerating here and there. What we know, and that's the statement in our presentation today, is that we will not see most likely an effect in 2026 from this. And then in outer years, yes, there will be first effects. So as I hinted, even though such a chip factory is not fully fledged and running at full capacity, of course, there will be first wafers being used in terms of test wafers, monitor wafers, and so on. So it will be a smooth increase in wafer demand. Eventually, our statement is we will not see a major effect from this yet in the current year.

Got it. Just a brief follow-up on this. One of your competitors stated yesterday that they saw already some rush orders, but they were not sure if that's sustainable or if it's just because some customers have very low inventory already. Do you see a similar dynamic, and are your memory customers giving you kind of extended visibility at this stage already, or is it still unchanged versus last year?

Now, what we see is, of course, the volume dynamic is there.

It's consistent. It started last year. It continues into this year. We see some of the memory players looking into, let's say, further strategic supply opportunities. So obviously, the memory situation is driving a different attitude already into the chip manufacturers. And they look maybe already a bit differently on the wafer situation now than they used to look maybe as you stipulated maybe a year ago.

That's absolutely right.

Thank you very much.

The next question, a follow-up question, comes from Martin Jungfleisch with BNP Paribas. Please go ahead.

Yeah, hey. Sorry, just one quick follow-up question on one of the earlier ones on the prepayment. Can you comment if the push out of the prepayment had any impact on pricing to those LTI customers? Has pricing been adjusted in any way? to those customers.

Thank you, Martin. That very short answer, no impact on pricing.

Cool. Sounds good. Thanks.

There are no further questions at this time. I will now turn the conference back to Ms. Malguera for any additional or closing remarks.

This concludes our Q&A session. Thank you for joining us today. We will release our Q1 2026 figures on April 29. On the slide, you can also see our next IR activities. Have a good day, everyone. Bye bye.

This concludes today's call. Thank you for your participation. You may now disconnect.