Siltronic Ag Ord

Hello everyone and welcome to the presentation of Siltronics Q2 2026 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 to this. At this time, I would like to turn the conference over to Verena Stutze, Head of Investor Relations and Communications of Siltronic AG. Please go ahead.

Thank you, Cynthia. Welcome everybody to our Q2 2026 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 Heckmeier, and our CFO, Claudia Schmitt, will 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 a 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 H-126 reporting are available on our website. I now turn the call over to Michael for his remarks.

Thank you, Verena, and a warm welcome also from my side. I would like to begin with the key messages of today's call. Demand is gaining traction. We see a market recovery in the 300-millimeter business. The 200-millimeter conditions are still sluggish, were still sluggish in the first half, but we are expecting a clear volume improvement for the second half of the year. At the same time, the market pattern remains uneven. Although demand for AI-related applications is strong, prices are still lagging behind. In C226, wafer shipments increased and our financial performance developed in line with our expectations. Two important milestones during the quarter were the successful completion of our capital increase and our re-entry into the German MDAX. Both reflect investors' confidence in Synthronix's long-term performance. Finally, based on improved wafer market sentiment for H2, we have slightly edged up our sales guidance for 2026. Now let me give you an update of our performance in the second quarter. Q2 showed a clear sequential improvement. Sales increased to €322 million. which lies 5% above first quarter sales. This was driven by higher wafer area sold as the demand recovery continued to gain traction across large parts of the wafer industry. Profitability improved slightly as well as EBITDA increased to €69 million and the EBITDA margin reached 21.6% compared with 21.2% in Q1. EBIT remained broadly stable at minus €52 million, as a slightly higher depreciation largely offset the EBITDA improvement. CAPEX amounted to €39 million and continues to focus predominantly on our 300 mm activities. Net cash flow improved compared with the first quarter, but remained negative at €27 million, reflecting our continued cash outflow for investments. During the quarter, we also successfully completed our capital increase, further strengthening our financial position and increasing liquidity to 650 million euro at the end of June. Let me now hand over to Claudia for a more detailed review of the financials.

Thank you, Michael. A warm welcome from my side as well. I will now take you through the financial development in the second quarter in more detail. In June, we successfully completed an accelerated book-building transaction, raising gross proceeds of €273 million through the placement of new shares, representing 10% of our existing share capital. The placement price was €91 per share, corresponding to a discount of around 7% to the previous day's closing price. Given that WACKER's secondary placement had established a market reference point only a few weeks earlier, the achieved pricing underscores the strong investor appetite for this transaction. The offering was very well received and multiple times oversubscribed, attracting strong demand from both existing and new investors, including long-only investors from Europe and the United States. We are also pleased by the meaningful support from our anchor shareholder HAL. We chose this timing because we identified an attractive market window supported by improving demand fundamentals, AI-driven growth opportunities, and strong investor interest. Importantly, the transaction was not undertaken to address a near-term funding requirement. Rather, it reflects a proactive step to further strengthen our strategic and financial flexibility and to position Siltronic well to capture attractive future growth opportunities. The use and timing of the funds will depend on market developments and pricing trends. The strong performance of our share price combined with the increased free float supported our re-entry into the MDAX at the end of June. Now turning to our operating performance, the second quarter showed a clear sequential improvement. Sales increased by 4.9% quarter over quarter to €322 million. This improvement was driven by higher wafer area sold, while pricing, product mix and FX remained broadly stable compared with the previous quarter. Despite slightly higher depreciation, gross profit improved from €-26 million to €-14 million. The higher wafer area sold resulted in improved utilization and fixed cost absorption. As loading continues to increase, the fixed cost burden associated with our expanded production capacity in Singapore is gradually declining. We expect the FED to continue progressing towards group margin levels by the end of this year. The positive impact from higher shipments was partially offset by a swing in valuation effects from hedging activities. At the end of the first quarter, Higher oil price assumptions resulted in a positive valuation effect from hedges related to electricity supply contracts with an oil price component. In Q2, however, easing energy and raw material markets led to a negative valuation effect. The combined ethics and hedging result moved from positive €11 million in Q1 to negative €3 million in Q2. Despite this headwind, EBTA increased from €65 million to €69 million with the EBTA margin improving to 21.6% from 21.2% in Q1. Besides improved fixed cost absorption, this development also benefited from certain costs that are typically incurred only in the first quarter. EBIT remained broadly stable at negative 52 million euro as higher depreciation largely offset the EBITDA improvement. Net loss improved slightly from 67 million euro to 63 million euro, also supported by a somewhat stronger financial result. Overall, the quarter confirms that improving demand is translating to higher sales and gradually improving operating leverage. At the same time, prices and product mix have remained a challenge. Michael will discuss these trends in more detail later. Let's now turn to the key developments on our balance sheet. As of the end of June, total assets amounted to €4.9 billion, compared with €4.8 billion reported at year-end 2025. Fixed assets decreased by €93 million, mainly reflecting depreciation exceeding capex. Working capital rose during the first half of the year. Inventories increased, reflecting a targeted build to support improving demand and prepare for higher shipment volumes. Receivables were also higher, primarily due to the timing of customer payments around the reporting date. Liabilities and prepayments decreased by €45 million, mainly due to the settlement of trade payables related to capex, including investments already incurred in previous periods. Cash insecurities increased to 650 million Euro supported by the proceeds from the capital increase and partly offset by ongoing cash outflows for investments. Equity increased to 2.2 billion Euro resulting in an equity ratio of 45% compared with 43% at year-end 2025. Net financial debt declined to €692 million. Based on our current assumptions, we continue to see potential for further improvement towards the end of the year. Overall, our balance sheet remains solid. The capital increase has further enhanced our financial position and flexibility. Let me conclude the financial section with a brief update on our liquidity position. As discussed earlier, cash and securities amount to around €650 million at the end of June. In addition, we continue to have access to an undrawn syndicated loan facility of €127 million. Overall, our debt maturity profile remains well balanced and largely unchanged. With that, I hand back to Michael.

Thank you, Claudia.

Turning to our updated end market view for 2026, the overall picture continues to strengthen, although the underlying drivers have become even more differentiated. We continue to expect wafer area consumption to grow by around 7% before inventory effects. This overall growth expectation remains unchanged compared to our Q1 view. The strong growth continues to come from servers. We now expect server-related wafer area consumption to increase by around 46% year-on-year compared to 44% in our Q1 outlook, supported by strong demand for AI applications, advanced logic, and high bandwidth memory. At the same time, the outlook for smartphones has weakened further. Memory capacity and allocation continue to prioritize towards AI-related applications. As a result, less supply is available for other end markets, which is weighing on smartphones and PCs. For smartphones, we now expect wafer area consumption to decline by around 11% in 2026. PCs are also expected to remain soft, with demand declining by around 10%. Automotive remains broadly unchanged compared with our previous year, with continued moderate growth of around 3%. Industrial applications are gaining further momentum from a relatively low base, including demand coming from data center infrastructure. We now expect growth of 13% for this end market. Beyond end market demand, inventory developments have also changed somewhat. In memory and logic, inventories at chip manufacturers had largely normalized. We are now seeing indications that memory players are starting to rebuild wafer safety stocks, most likely to secure supply in an environment of strong AI-driven demand and tightening wafer availability. In power-related applications, inventories are improving but still remain elevated. This keeps weighing on the 200mm market in H1, although we see clear signs of demand recovery for the second half of 2026. Overall, the positive end-market trend continues. The above-mentioned safety stock rebuilding could provide additional upside to wafer demand. Let me now translate this market environment into Seltronic's volume and pricing development. The demand recovery is becoming increasingly evident in our business. In 300 mm, we're seeing positive pricing developments on low volumes in the non-LTA space. However, these prices are still below reinvest level. In 200 mm, we see a strong demand environment in H2. However, our current staffing needs to be adjusted to accommodate these developments. Prices in 200 mm declining during the first half of 2026 and we expect them to stabilize in H2 from this low base. As a result, we expect wafer area sold in 2026 to increase year-on-year despite the closure of our small diameter business. Although the environment is improving, we still expect an overall negative price impact in 2026. In addition, 200mm product makes ways on our performance, particularly due to the still subdued wafer power market. We also expect a negative year-on-year FX impact. The average Euro against US dollar exchange rate was 1.13 in full year 2025, compared with 1.17 in H126. For H2, our planning assumption of 1.18 remains unchanged. Now turning to our updated guidance for 2026. Supported by the improving demand environment, we've slightly edged up our sales guidance. We now expect the top line to come in low to mid single digit below 2025. On a like-for-like basis, excluding FX effects and the closure of SD business, sales are guided to be on or slightly above previous year's level. Our APTA margin guidance remains unchanged at 20% to 24%. While sales are expected to develop slightly more favorably than originally anticipated, The positive impact on OBTA is partly offset by higher freight and energy costs compared with the assumptions underlying our original forecast. We also confirm all other elements of our guidance. With that, we conclude our Q2 2026 results presentation. Claudia and I are happy to take your questions. Thank you very much for your attention. Cynthia, please open the Q&A session.

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 your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We'll pause for just a moment to assemble the queue. The first question comes from Constantine Hesse with Jefferies.

Good morning. Thank you so much for taking my questions. It's great to see a more constructive environment finally coming through. I've got three questions, if I may. So one is just to understand the pricing dynamics and LTAs. So if you were to close LTAs today, would prices have to be above Thank you, Konstantin. That's a great question. We always said prices need to come up

and to cross the reinvest level. So that holds true unchangeably. So we see good pricing dynamics in 300 millimeter outside LTAs, but on a very low volume base. And we would see this to further improve in the near future. And then it would become more attractive to close future LTAs. At the same time, We have to have in mind that LTA is not only governed by price. There's of course a whole load of parameters, specifications, volume considerations, and so on and so forth. But we're saying clearly pricing should further recover to come to a reinvest level, and that would be the future LTA framework.

Thanks, Michael. But just to understand, did you say it has to cross the previous reinvest level so we have to see prices higher compared to the previous high?

It depends on the specifications and the world moved from 2021, 22 to today, of course, right? There were cost increases, inflation, all sort of. On the other side, we have It depends really on the details. Every LTA is a bit a unique thing. But as we said, we would love to see prices coming up above before we talk about reinvestments.

Okay. No, fair enough. Second question on the cap rate. So I want to drill down a little bit into this because obviously the the communication was often focused or was often said that you know a cap raise was not really in the books so what i'm wondering here is i understand that you can always do a cap raise opportunistically and the market environment was pretty attractive then but what i i'm trying to really get a little bit more detail out of this is with this cap raise could this also be a signal that you potentially see The requirement to have to increase CapEx again because of all this new demand that is coming around in 27 and 28, and probably because demand is now reflecting a faster recovery than initially anticipated. So is it maybe fair to assume that this cap raise also has a bit to do, beyond being opportunistic, also has a bit to do with the fact that you're now seeing the requirement to invest in CapEx potentially faster than what you had previously planned?

That's my second question.

Thank you, Konstantin.

The capital increase was clearly an opportunity which we captured. And as you know, we're talking about more general terms around this, strengthening our balance sheet, increased financial flexibility. We do not plan to allocate those funds very clearly to future cutbacks or to deleveraging or whatever. But for us, it was a really great opportunity to broaden the bandwidth we can act on. At the same time, our statement is clear. We are ramping our FAP in Singapore. We are following with that the market demand. And at a certain point in time, which we want to also combine with the earlier pricing environment discussions. Of course, we need to move on with investments and bring in machinery and tools further into Singapore. But that's, in a way, an independent question. The cap raise was very good to broaden the bandwidth and, let's say, give us flexibility. But at this point in time, we wouldn't clearly combine it with a future CapEx statement.

Okay, fair enough. Michael, if you could just give us an update on where are we on the FAP next? I mean, a few months ago, actually a year ago, we were talking about a slower ramp up of about 100,000. I think we're definitely quite a bit above that now. And I'm assuming you probably still have quite a bit of room left inside that clean room. So when could we see potentially a next round of brownfield investment coming through?

So first of all, you're right, we put the brake a bit on the earlier phase of the ramp in Singapore. I think that's more historic. In the meantime, we are fully back on, let's say, ramp scale following the market demand. So that's running from our perspective very smoothly. By the way, including EPI, which we brought into Singapore 200 millimeter for the first time, as you know. So we are quite happy with the ramp there. With the profile of customer and project qualifications, we set the base to really now ramp up the factory. At the same time, the future view on this, I combine it again a bit with the pricing environment. We would take the liberty to look carefully at which volumes do we want to onboard going forward. and where do we wait maybe a little bit until pricing recovery is really visible and coming through because we need to see better prices in 300 millimeter to justify you know more investments also to fully Thank you very much.

Thank you so much, Michael and Claudia.

The next question comes from Harry Blakelock with UBS.

Good morning. Thanks for taking my question. I guess a follow up to that last question and comment from you, Michael, in terms Hearing from customers around potentially being willing to pay higher prices for wafers in order to justify new capacity, I guess it would be useful to get some color around your conversations with customers. We hear a lot about leading-edge logic and memory capacity that's getting built out globally over the next few years. Are you having any conversations with them about your capacity and your ability to satisfy that? that increase in volume.

Yeah, thank you, Harry. I think what we were touching so far from Konstantin's question was more near-term demand and the situation. Indeed, in addition to that, we have customers approaching us to manifest and confirm their, let's call it mid-term demand, particularly in the memory space. We see that there is, let's say, that the need for customers also talk about, let's say, two years, three years time from now about volume developments and talking starts about some LTAs. At the end of the day, it's a bit the same story. Yes, we appreciate those conversations and we engage in them very happily to understand the market need. But the pricing here, it's the same statement. If we talk about the more brownfield view on Singapore, or if we talk about whatever in the future, we need to see prices coming in higher to justify further investments. I think this is pretty much in line with what some of our peers are also articulating. So from that perspective, yes, different time perspective and similar conversations.

Got it. Super clear. And then on your comments on pricing in terms of 300 millimeter wafers, LTA is stable. I understand that. But the spot price is rising. I was wondering whether you could quantify that at all, even if it's high level, kind of low single digit, mid single digit.

Harry, if I got your question right, your question was, how does LTA pricing in 300 mm compare to current spot pricing? In spot pricing, we still see the indications that some small volumes are coming in already at better pricing. However, Talking at the complete spot space, it's still below the LTA level of pricing. That's what I said earlier. It needs to come up now to really enhance the operating performance that we can talk about further investments at a certain point in time. What we see today in spot pricing, it's still below LTA level and it's clearly below reinvestment.

Thank you, Michael.

The next question comes from Martin Jungfleisch with BNP Paribas.

Yes. Hi. Good morning. Two questions, please. The first one is on the demand side in 300. One of your peers this week was saying that customers are now requesting volumes above their LTA volumes. Is that something that you are seeing as well? and maybe you can also share how 300 millimeter volumes have trended through the second quarter and if you saw demand trending up through the end of the quarter, so in June. That's the first question.

Yeah, thank you, Martin. Indeed, demand is moving on, and it's one of the reasons, you know, this demand recovery driving also our sales development, Q2 versus Q1. And we're also the underlying reasons why we could improve a little bit our full-year sales guidance. We have both here. We have new customers or small customers approaching us around 300 millimeter sales. and we have some existing customers who are considering how to get upsides so it's in a demand environment volume wise it's a very nice situation coming back to the earlier questions and discussions This happens still at the price level where we want to be very careful and selective whom we give which volumes currently and particularly locking in volumes for future directed LTA. So pricing is of utmost importance now. Now the price need to come up to make this whole wafer industry viable and bring us and that whole wafer space into a position of following this whole Overall chip growth being announced.

Yeah, no, that makes sense. But I know you're not guiding quarterly, but what is kind of your expectation for the third quarter? Would you expect this to be rather like a gradual improvement from Q3 to Q4 or maybe more like a hockey stick one? Do you expect Q3 to be like marginally up or is it like meaningfully up versus the second quarter?

I mean, you gave the major answer already. We don't guide Q3. But if you take our full year guidance and make a simple math exercise and what we said earlier, we see a more gradual recovery. We wouldn't see explosive or dramatic changes. So we would more see a steady growth over the quarters for the rest of the year in the framework, of course, of the total year guidance.

Okay, no, that makes sense. Thanks. And then finally, just on 200, I mean, you started a bit more positive on 200 millimeter today. Is it fair in terms of utilization rates that these are still lower than, I guess, 2019 or 2023 levels? And in terms of pricing, you also said it's stabilizing. I guess if the trend continues, would you expect you would be able to increase prices maybe towards 2024 this year, maybe early 2027?

So the 200-millimeter situation has been very difficult. I think we were very clear and vocal about that, including H1. And last year, it was really volume and price-wise very, very difficult. So this year now, over the year, and particularly around the second, third quarter, we see the volume recovery still at a very low level. Price level. EOTs are coming up. I would say it's fair to say we're still below 22 EOTs in 200 millimeter. However, Now it's even more important that the prices also pick up because price went down so heavily that it's of utmost importance that we also see the price recovery. In addition, those nice additional volumes that are coming into the game now are not delivering a lot of, let's say, revenue or even a bottom line contribution because of the price effect I was mentioning. And in addition, we have still a negative product mix and some of our more option strong 200 minute products are in low demand still.

Okay, that makes sense. Thank you.

The next question comes from Misa Kaskas with Odeo VHF.

Yes, thank you. I will be back to the LTA. Can you please specify what portion of LTAs is due to expire in 27 and in 28?

Hello?

Yeah, can you hear me? Yes.

Hello, Michael. Yes, thank you. Yeah, I just want to ask again about the LTA. What portion of the LTA is due to expire in 27 and in 28?

So our overall situation is that around two-thirds of our business is an LTA. LTAs, the majority of that is in 300 millimeters. and we do not see, you know, an LTA cliff or major LTA changes. However, there are smaller ones which we could then hopefully launch under new terms in 27 and 28.

Okay. So as demand continues to recover, there is a growing discussion about a potential wafer shortage, especially as some part of the semiconductor industry is already experiencing supply constraints. So what's your view on supply-demand balance over the next few years? Do you think that also the wafer industry could enter a period of shortage?

So for the time being, as we talked about pricing already a lot, there seems still to be a bit, maybe let's call it a bit more wafer supply than demand. I would say that could change pretty soon in the next quarters. and the true indicator for all of us would be the price pattern and the price behavior. We need that price change. I think I was very vocal and clear around that and we want to see it hopefully happening in the very near future. Otherwise, people like us will consider how to spend money on further capacity which would then further shorten demand and eventually price need to come up to bring this back in balance. As you know, the chip industry enjoyed very nice quarters and even years when we look at the memory space for the waiver industries was much more difficult and now it's the time that this has to be rebalancing.

Okay, thank you. Very clear.

We will take our next question from Vaisel Taza with Bankhaus Metzeler.

Yes, good morning. Claudia, a question regarding your prepared remarks. I'm not sure if I got that correct. You said that next, by the end of the year, the utilization will be at I'm not sure if I got your statement correct.

If you could repeat that, please.

Yeah, hi, good morning. My statement was that by the end of the year, FabNext EBTA margin will approach a group margin level, or in other words, the dilution effect will

I mean, I will try that.

Are you willing to share what was the drag in the first half?

Yeah, we didn't close that, but we didn't close that. But what we always said is that the ramp of a new FAB comes with, let's say, ramp cost, a lot of fixed cost compared with, yeah, Thank you very much.

Thank you.

And then second question, a follow-up to your LTA comments that you are not going to face any LTA or bigger LTA cliffs 2027 and 2028. Maybe I have a wrong understanding, but the last time you signed LTAs was probably 22, 21, 22. The last upcycle, if you assume the duration of such LTAs is on average around three years, you have some volume push during the downturn. But in my view, the LTAs from the last upcycle, are coming to an end, no? And then, so customers need to agree on new LTAs or extend LTAs with new volumes and pricing or what I'm missing in this assumption.

Thank you, Reza. It's a bit more complex indeed. So you're right, major LTAs have been concluded in the framework of setting up FedNext. That was around 2021. They were far above a three-year duration. I think we were very clear that some of them are even running until 2030. So there's a bunch of LTAs which are really long Long-term agreements. At the same time, we call everything what is one year or above an LTA. And besides those long ones, of course, we have a portfolio of shorter ones, one year, three years, two years, whatever. and some of them have also been concluded even last year, two years ago. So it's a kind of rolling ongoing overall portfolio. So therefore, we have long-standing LTAs at the same time with shorter ones, which would then give at a certain point in time some flexibility to negotiate new ones if prices are coming up, then in better commercial frameworks.

Got it. And then on the 300 millimeter wafer loading, I mean, one of your competitors last week indicated more or less that 300 millimeter is sort out. And I was wondering if you could share a little bit your utilizations. I mean, the assumption was in Q1, yeah, Hi, 80s, low 90s. Would you say that we are going into areas really where you can say full utilization and that would be for me around 95% plus?

Yeah, thank you. We have indeed a strong duty, particularly in our legacy feds. In our new firm in Singapore, of course, there is some space. We can gradually further rank there in the existing framework. But you're right, overall the team industry looks to be very high, which coming back again to my major theme should be the point where then also prices are moving upwards. We have small volume indications, but we don't see the major trend yet. That needs to happen now.

Thank you. And then final question on the pricing environment. A little bit tricky one and not specific to Siltronic, but to understand a little bit the dynamics. On the industry level, so I think in the 2017-18 upcycle, the prices were quite low and I think the LTA prices moved during this time around 50% to the upside during this upcycle. I think 2021-2022 was a much lesser LTA increase probably, so around 20 maybe high teens, low 20s. If you have to compare now this cycle versus the previous two cycles, what would be your gut feeling for the industry in terms of the pricing if all elements really developed the way like we are expecting for the next two, three years, particularly on the strong AI demand as well? So what would be your gut feeling for the industry from LTA pricing perspective? Would it be rather more the 2021-2022 or the stronger area, the 17, 18, 19 years?

Yeah, thank you very much. I'm not maybe the best historic expert here in the call, What I want to reiterate is the following. When we look at cheap price developments around AI in memory, in leading-edge logic, and in the meantime, even the power players are very vocal that they also contribute meaningfully of this AI hype and cycle. From that perspective, I think there must be a very significant price increase coming to the vehicle industry as well to balance the value creation around the whole value chain. We don't see it yet on a broad scale. We see it here and there on small volumes happening. But I think a broad, meaningful price increase is a fair thing to happen to rebalance the situation that emerged in the last two years or so. I wouldn't speculate now about any real numbers, but I would definitely work on the assumption if demand is getting shorter, of course, then prices will raise and have to raise significantly for the set reasons.

Thank you very much.

The next question comes from Florian Trice with Kepler.

Yes, good morning all. Thanks for taking my question. I have basically a follow-up just building on your last message. I mean, if I look at Fabnext now being ramped up, I think most of those capacities are covered by LTAs, i.e. are probably not good for any near term, let's call it next one to year's price increases. So let's call it the big price uptake on Zetronix and can probably come from, let's say, additional expansion, additional investments, which will then ultimately trigger the question, do we need another FabNext announcement in the coming days or coming quarters or years to really be available towards the end of a decade? Thank you.

So thank you very much.

I mean, talking about the whole business first, we said roughly two-thirds of the business in LTA, so that's one-third outside LTA. So that means, of course, that's the space where we would clearly need to see now the Let's say multiple discussed price changes and increases. We are not in the situation where we will announce a FAB over next anytime soon. And there are manifold reasons. So first of all, we don't see the demand spiking up to those levels, really. Secondly, our FAB is still Partly ramped, but we were very clear there is still a lot of brownfield opportunities there. And that, of course, would be the first thing we will consider. And now, repeating myself, maybe for the fifth time, but even for that further brownfield ramp, we would need to see pricing really increasing meaningfully. So overall, no discussion tomorrow and anytime soon about new greenfield investment from our side.

Great. Thank you very much.

The next question comes from Dirk Schlumpf with DZ Bank.

Hello, Dirk speaking. One from me, follow up on 200 millimeter. Could you elaborate a bit on what has changed in the 200 millimeter field over the past few months? What drives the recovery currently and do you think there is a good chance that the pickup will be sustainable?

Yeah, thank you, Dirk.

And when we look at end markets, I think when you follow the power chip manufacturers Maybe two, three quarters ago, they started being more vocal that their business also starts and increasingly is benefiting from data center power supply and power management and so on and so forth. So we would say we see that now really tripling also into the wafer space, despite some of the areas in 200 millimeters still have large inventories at our customers. So that means that the volume pickup did start quite significantly, and it will continue, of course, in the next months and quarters. Typically, and that's what we were discussing, 300 millimeter after volume picking up, demand supply should be in a new balance, and then also pricing should pick up. So from that perspective, we would definitely see that 200 millimeters also marching upwards In a more sustainable manner, it's not only, let's say, a one-time or one-quarter effect. We see in terms of loading, it's advancing nicely already. We are stuffing or restuffing some of our lines again, which we were handling very carefully for our cost and cash optimized approach. so therefore we can follow that demand and of course with recent news flow from one of our competitors there could be another smaller shortage around certain 200 millimeter products so we have been approached by some of our customers to fill up some demand and some of them even start a discussion about 200 millimeter LTAs so we see definitely a changing environment for 200 as well.

Okay, thank you.

We have a follow-up question from Konstantin Hessel with Jefferies.

Thanks. Just quickly, just to better understand on the Feb next situation. So, Michael, you said in Q1 that utilization was already running in the 90s at an industry level, right? Clearly, demand is picking up. So what I want to understand about Febnext, and I know you don't like to share numbers, but I'm just trying to understand here, right? So you say you still have a lot of room inside Febnext where you can still add equipment, which would require brownfield investment. But with demand now picking up, it doesn't look like you have a lot of room left until you run out of production capacity at all. In order to satisfy customer demand, I'm just trying to figure out, is there still equipment coming into the fab which you already paid for, which will give you some additional capacity? And if we get to the point, part two of the question would be, if we get to the point where prices have moved to a level that will basically allow you to do brownfields, how long? How long does it take to basically order the equipment, install the equipment, and get it certified?

So, first of all, Konstantin, yes, you're right. Still, we have equipment flowing into Fabnex, and that's one of the reasons why we still have a little mismatch between our capex and our cache numbers. I think we talked about this in the discussion. still there. So that means UT is one thing, but of course capacity is also growing in the current FedNext environment. And you're right, UT is large, but as capacity is still growing, of course overall output is still growing and has room to grow further. In terms of future brownfield, and having in mind the discussions we were having around pricing, Lead times would be, I think we were also clear about it, 18 to 24 months, depending on different equipments. We are in close contact, of course, with our major suppliers and want to be ready in case we feel we have to be. So we're warming up here and there, but we didn't, let's say, trigger any real future capex.

Okay, so this is the point that really struck me.

For the further capacity there.

Understood. So this is the point that really surprises me. So with lead time of 18 to 24 months, with so much capacity coming online at the chip level over the next two years, you still don't see, from today's perspective, you still don't see the need for that additional ground field at the moment, given the current demand curve that you have over the next two years.

So our current stance, I mean, when you look at those cheap announcements, There is not so much coming on stream in the very near future. So we look more on a strong demand increase later. And our stance is from today's perspective, we would rather be more selective on volume and pricing than now investing and bringing low-priced volumes into a more expensive footprint. From that perspective, We need to see really how the demand is really gaining traction, how the pricing are really developing, and with that synchronizing and timing all our further capex and our future additional capacity.

Understood. And this is just one last point because I heard this a couple of days ago, and this is quite interesting. I heard that from one of your peers that we even had Chinese chip manufacturers reach out to get supply of 200-millimeter wafers from Western players, i.e., in this case, your Japanese competitors. Is this something that you're seeing as well? Are you seeing some of the Chinese customers reaching out to work with 200-millimeter? Because that surprised me quite a bit because China obviously has a much stronger position or has a strong position in 200-millimeter.

So we get... We have 200mm requests from all over the globe, I can say, including China. And it's not new for us that also Chinese customers, even in segments like 200mm, for advanced specifications, they love suppliers from the established supply base, including us. Let me reiterate, 200mm, before... everybody gets formally exciting about the recovery story that we still have the negative product mix effect that means our best margin products are still in let's say lower demand and that we have the the pricing still recovering from a very low base if we look at price development in the last two years it was really difficult and that needs to be recovering first before we see also meaningful and eventually even bottom line contribution recovery from 200 milliliter.

Understood. That's great. Thank you very much.

As a reminder, if you would like to ask a question, please press star 1. We have a follow-up question from Vaisal Taza with Bank Haas Metzeler.

Yeah, my question was actually regarding this 200 millimeter because you mentioned you have some mix, negative mix impact there. And I was wondering, I think the float zone power is in 200 millimeter probably the highest margin product, if you can confirm that. And I mean, AI Data Center Power is, yeah, the demand is quite high. So I was wondering why the volumes are still, for you Dan, low in this part of the business. But again, maybe I'm wrong that this is not your highest margin product.

I think we always said clearly that we have strong position in flow zone and in highly doped materials, so that's true unchangeably. The details around this is really about what sort of end products are currently needed. Is it more MOSFET side? Is it more IGBT side? And currently we see that unfavorable product mix also on the chip side, and that is coming through then to the wafer application side as well. But yes, you're right. We like and have a strong position in the flow zone.

Okay. And probably in this part, was the inventory still high or the customers?

Yeah, you're right. In some of those, due to the demand lacking and not coming in very quickly, you're absolutely right. Also, inventory is still a topic at some of our customers.

Okay, and then the final question. I guess so for the very short time order for the remainder of the year, you probably have already agreed on Q3 volume shipments, right? But probably also early visibility into Q4, but volumes, et cetera, are not set for Q4 right now. or has that changed so that you already have prolonged visibility into Q4? And then related to that, if you would compare July versus April and May, how was the demand trend in July?

So thank you very much, Jan, and you're right, of course, today we're already late July, so it means one month of Q3 is already gone. And we can say that a significant part of Q3 is already negotiated and kind of in the process of being Manufactured, shipped and commercialized. Q4, it's a bit more mixed picture still. Some of it is fixed and negotiated, but we still have some volumes to treat in a flexible manner. And of course, we try to work very hard here to get the best commercial conditions for what is still available.

And July trend, if you can comment from demand perspective. I mean, I think that June was quite strong, and I don't know if you can comment on July. So, really, month over month change in demand environment, if you have the feeling it's accelerating.

I would be reluctant to make a let's say general July statement as you know in our business and I think we explained that in earlier calls if some customer orders at the end of the month a bit more or less or some order slips from one month to the other we have a total or we have a significant difference in monthly performance but that's the reason we even sometimes have a bit between quarters we have some special effects I would overall confirm that we have indeed a very decent, strong demand environment. I wouldn't really emphasize single months in this context.

Fair enough. Thank you very much.

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

Thank you. This concludes our Q&A session. Thank you for joining us today. Please note that we have rescheduled the publication of our Q3 26 results and will now report on November 4th in 2026. So on this slide, you can also see our next IR events. Thank you and have a good day. Bye.

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