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Soitec Q1 Revenues Reach €92 Million

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Up 32 percent compared with €69.6 million in the first quarter of FY'18
Soitec (Euronext Paris), a company that designs and manufactures semiconductor materials, has announced consolidated revenues of €91.9 million for the first quarter of FY'19 (ended June 30th, 2018), up 32 percent compared with €69.6 million in the first quarter of FY'18. This represents a 41 percent increase at constant exchange rates.

On a sequential basis, first quarter FY'19 revenues were stable at constant exchange rates compared to the fourth quarter of FY'18 but showed a 5 percent growth at constant exchange rates excluding royalties and intellectual property which benefited from one-off revenues in the fourth quarter of FY'18.

Paul Boudre, Soitec's CEO, commented: "As expected, we had a good start of our fiscal year 2018-2019 with more than 40 percent revenue growth excluding currency impact, thanks in particular to a strong increase in FD-SOI and RF-SOI 300-mm wafer sales. We have thus further rebalanced our revenues between 200-mm and 300-mm. In the meantime, the utilisation rate of our Bernin II 300-mm plant continues to rise. Lastly, the success and the favourable terms of our recent convertible bond issue illustrate the confidence shown in Soitec's prospects and strengthen our ability to finance the investments needed to support the growth in our markets."

Communication & Power
Sales of products for RF and power electronics applications have been growing quarter after quarter. In the first quarter of FY'19, 200-mm wafer sales (RF-SOI and Power-SOI) showed further incremental growth at constant exchange rates compared to the fourth quarter of FY'18, whilst RF-SOI 300-mm wafer sales recorded a particularly strong surge.

Especially well-suited for smartphones' switch and antenna tuners, RF-SOI helps coping with the rising number of frequency bands and higher data speed requirements of mobile communications. RF-SOI content is increasing significantly as more antennas are needed to boost data rate.

In the meantime, the deployment of LTE Advanced Pro (4G+) requires greater RF complexity. Foundries continue to increase RF-SOI capacity in 300mm to complement offering in 200mm and some RF components such as LNA (Low Noise Amplifier), which combine antenna switch and power amplifier, can benefit from more advanced processes available in 300mm.

Demand for Power-SOI substrates remains strong as power conversion circuits are widely used in the automotive industry, but also, increasingly, in industrial, consumer and white goods applications.

Digital
In the digital business unit, FY'19 first quarter revenues were significantly higher than in the first quarter of FY'18, although slightly down compared to the fourth quarter of FY'18, which reflected in particular the usual positive fourth quarter seasonal effect in sales related to PD-SOI wafers (partially depleted silicon-on-insulator) that are used for ASICs, servers and networking applications.

Sales of FD-SOI wafers (fully depleted silicon-on-insulator) have grown steadily, quarter after quarter, since the first quarter of FY'18 and have shown another substantial increase in the first quarter of FY'19. FD-SOI provides strong value across many applications such as automotive (ADAS, Infotainment, Radar/ Lidar), smartphones, IOT and Home (wireless communication, single chip SOC, Edge Computing / AI Processors, ISP for security cameras) and the Cloud (cyber currency, blockchain processing).

The level of sales of Imagers and Silicon Photonics was a bit lower than in the fourth quarter of FY'18 which enjoyed particularly strong sales. They remained however at a good level: Imager-SOI substrates provide the highest level of performance in 3D imaging for consumer application and Photonics-SOI sales continue to be supported by the demand for increasing data transmission speed in data centers.

First quarter FY'19 consolidated sales (unaudited)
Compared to the first quarter of FY'18, 200-mm wafer sales enjoyed a strong double-digit growth at constant exchange rates whereas 300-mm wafer sales have doubled. This resulted in a further rebalancing of Soitec sales breakdown: 300-mm wafer sales rose from 30 percent of total sales in the first quarter of FY'18 to 43 percent of total sales in the first quarter of FY'19; consequently, the proportion of 200-mm wafer sales went down from 67 percent to 55 percent of total sales.

200-mm wafer sales
Sales of 200-mm wafers went up 16 percent at constant exchange rates in the first quarter of FY'19 compared with the first quarter of FY'18. This reflects a combination of higher volumes, a more favorable product mix as well as price increases. Higher volumes mainly came from the 200-mm wafers produced by Simgui's manufacturing facility in Shanghai, using Soitec's proprietary Smart Cut technology.

In the meantime, strong demand and tight capacity allowed Soitec to focus on higher valued-added products. And, in a context of tight silicon wafers supply, Soitec has been able to pass on silicon bulk material price increases to its customers. On a sequential basis, sales of 200-mm wafers rose by 3 percent at constant exchange rates compared to the fourth quarter of FY'18.

300-mm wafer sales
Sales of 300-mm wafers in the first quarter of FY'19 were up 98 percent at constant exchange rates compared with the first quarter of FY'18. This results from of a very strong surge in sales of FD-SOI and RF 300-mm wafers which are clearly now the two most important components of 300-mm wafer sales. Sales of PD-SOI product line were stable. Sales of Imager-SOI were lower than in the first quarter of FY'18 which benefited from its first strong orders. Sales of Photonics-SOI were slightly up from the first quarter of FY'18.

On a sequential basis, 300-mm wafer sales of the first quarter of FY'19 were 8 percent higher at constant exchange rates than in the fourth quarter of FY'18. The capacity utilization rate of Bernin II 300-mm production site, which reached more than 50 percent in the fourth quarter of FY'18, has further increased in the first quarter of FY'19 thanks to higher volumes of both FD-SOI and RF 300-mm wafers.

Royalties and IP
After the sharp increase recorded in the fourth quarter of FY'18 at €6.1 million and which was due to one-off events, revenues from royalties and intellectual property went back to a more normal level at €1.7 million, representing 2 percent of the quarter total sales. This compares to €2.0 million achieved in the first quarter of FY'18.

Outlook
Soitec reiterates the FY'19 guidance given on June 18, 2018. FY'19 sales are expected to grow by more than 35 percent at constant exchange rates. FY'19 Electronics EBITDA margin is expected to reach around 27 percent.

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