Silex Microsystems AB (publ) (SILEX) Earnings Call Transcript & Summary

Welcome to Silex webcast on the 7th of July 2026. Today's call will begin with a presentation from the company's speakers: CEO, Edvard Kalvesten; and CFO, Maria Engstrom. [Operator Instructions] I will now hand over the floor to CEO, Edvard Kalvesten. Please go ahead.

Thank you. So today, we have announced that Silex has acquired one semiconductor fab in U.S., meaning that we are establishing our first U.S. manufacturing footprint. So my name is Edvard Kalvesten. I'm the CEO and I founded the company 26 years ago. And here, I also have our CFO.

And my name is Maria Engstrom, and I'm, as Edvard said, the CFO of the company.

So what has happened? Today, we have signed an agreement to acquire a 200-millimeter fab. It's an old IC Fab in Mountain Top, in Pennsylvania, 2.5 hours from New York Airport. You can see it on the picture here. This is according to our prospectus we disclosed at the IPO, where we have said that we had an LOI, a Letter of Intent. And since then, we have finally negotiated and agreed on terms for that. So it is structured as an asset purchase. So we don't buy the company, but it's an asset purchase, which includes the real property, the production facility, all infrastructure and manufacturing equipment. It also includes that we will take over the employees at the fab, which at current stage is 130, very experienced semiconductor employees. The purchase price is a total of USD 40 million: USD 10 million at signing and USD 30 million closing. And the closing will take place at year-end 2027. For Silex, it means that we can build up the MEMS capacity and capabilities in parallel, when Onsemi ramps down their legacy products in the fab. So this is the advantage with this long closing time is that they have the time to finalize their production, while we, in parallel, can ramp up our development. They continue to operate the fab, but we will be able, according to agreement, to both develop and produce products with their help in the fab during this 1.5 years. Closing is subject to customary conditions and approvals from CFIUS, which is expected or normally, it takes 3 to 6 months to get this approval according to our lawyers. So this is a picture of the fab in, as I said, in Mountain Top, and it looks like a normal IC Fab and Onsemi own this, and they have several fabs, and they are going now as all semiconductors -- normal semiconductors are they are going to smaller dimensions and the next nodes. So they will transfer their existing products to other fabs. While for Silex, we are doing MEMS. This is perfect match, because this is a very cost-efficient way to get that equipment and that facility, which would cost much, much more, if you would buy -- build it and buy it from scratch. So our growth strategy, as communicated during the IPO has been to continue to focus on key end markets which is that, you probably remember them, it's the consumer, and it's the medical and life science. We have the telecom. And we have all type of defense and such, which we haven't been able to go into yet, but which will be unlocked now, it is. So continued focus on key end markets. We continue to invest in innovation and capacity in Sweden. So Sweden fab will continue to invest in parallel to this big investment in U.S. As we said, IPO unlocked some certain segments, which is defense, but also some infrastructure, which we couldn't reach without the U.S. footprint. So this footprint was a big, big milestone for Silex, and that will be a big focus now for the next years. And also the next step will be to go from 8 to next node, next-generation MEMS, which is 12-inch, and that is planned now to be established in Sweden. And therefore, Silex as a leading MEMS foundry -- the leading MEMS foundry. We want to be first on 12-inch pure-play MEMS foundry and that we think that would be medium term would be good for that, and that's typically around 2030. So that would be the next step after the U.S. expansion. So why is it important to be in U.S.? Many of our largest customers, we have 55% of our revenue today is U.S. dollar -- U.S.-based. And many of these big customers we have, specifically the Mag 7 companies, but also some other companies have communicated us it's extremely important for us to be in U.S. to be able to be part of the next-generation MEMS. We have been able to have them as customers up to now because we are the largest MEMS foundry, and we have capabilities, which nobody else has. But long term, this was a necessity. So this local capacity, of course, it's faster response time and closer customer integration. But the most important is really that you are where your customers are, that they feel that we are in U.S. And that's, of course, because of all geopolitical reasons we have nowadays, which can change in both directions. But we think it will be very important to have fabs in U.S. long term, because U.S. is our absolutely most important market. Acquiring a legacy integrated IC Fab, as we are doing here now, is a very cost-efficient way. So we typically, a MEMS fab has 80% standard equipment and 20% MEMS equipment. So in this way, we get this 80% standard equipment, and then we will add MEMS equipment to this fab during the coming years. So we have a complete MEMS fab exactly in Sweden. And this fab in U.S. has the potential to be even bigger and much bigger than the Sweden fab long term, if we do the necessary investments, if and when. Also an advantage with this fab in U.S. is the FX advantage with the -- currency exchange rate that we also have some cost in U.S. dollar. If you look into this fab, so it is 8-inch or 200-millimeter semiconductor fabrication facility. It's the same wafer size as we have in the Sweden fab. The existing cleanroom, which is manufacturing the IC for Onsemi is 300 square meters (sic) [ 3,000 ] square meters, but it's easily added 12,000 square meters, which earlier has been cleanroom and usable for MEMS. So that is where we will expand with further MEMS equipment to add -- to make a complete MEMS line. And that will be managed during '26, '27 and hopefully being finished to '28 for full speed production. Sweden fab has around 4,000 square meters. So, the first step in this is to having twice the cleanroom space of current Swedish fab. So typically 8,000 square meters. So how it will work is that, we will start to qualify and develop MEMS products during the -- already after the CFIUS approval. During '26, '27 and then ramp up the production for a few products. And then that continuously will continue. And as we have said before, in 2034, this fab will look similar to the Swedish fab in terms of capabilities, capacities and financial numbers. Employees to be offered employment here is around 130 currently. And to this, we will add MEMS expertise trained in Sweden. So we have hired now 25 employees, engineers in Sweden fab, which we will train the coming year and being transferred continuously over to the U.S. fab over these years. So looking at the time line and repeating that, so we have this binding agreement signed now today. So we gained access to premises, and we will start to do transfer some MEMS products. In '27, we'll continue to qualify new products and start up MEMS equipment. And in '28 -- January '28 or year-end '27, we will close this deal, and we gained the ownership and take over everything. In terms of investments, the CapEx in '26, including the purchase price of USD 40 million, it's around SEK 1 billion in '26, '27. And then we will invest around SEK 200 million per year up to 2030. And as a goal, we will reach breakeven on EBIT level in '29, 2030. It will depend on product mix exactly when it will be reached. And in 2034, as I said before, we will reach the same number -- financial numbers as we have had in Sweden fab 2025, which means -- meant a revenue of around SEK 1.4 billion and an EBIT margin of around 27% and the adjusted 29%. And this fab will be funded mainly through existing cash. You probably remember, we raised SEK 1 billion in the IPO, but we also have a leasing line or debt line available if needed. So that was my presentation. And then I guess you might have some questions.

[Operator Instructions] The first question comes from Erik Lindholm-Rojestal at SEB.

Yes, Edvard and Maria, I hope you can hear me well. And congratulations on deal here. So -- just given a couple of questions from me. Just given how hot the semiconductor market is, significant bottlenecks in many areas, do you think that there is sort of any risk to delays in terms of buying new equipment or risk that this expansion becomes more expensive than you have anticipated? And I can start there, perhaps and come back with another question.

That's not expected. We have already started to discuss with the equipment supplier, and we don't see that it will be later or more expensive than we have planned.

All right. That's clear. And another question. So just sort of what feedback are you getting from customers on this transaction? And is there are any customers that have committed to volumes already in the U.S.?

I can't get into details on that, but I can say that it's a very positive response. Already when we said this will happen, it was positive response. And we -- our sales team is in discussions every day with existing and new customers about this opportunity to have their MEMS manufactured in this American site, which for some is very, very important. So this absolutely opens up new possibilities.

All right. And just expanding on that perhaps, I mean, would you look to move a project over from the Swedish fab to the U.S. fab? And sort of how do you plan to dimension the Swedish fab in light of this expansion?

Typically, not. One or maximum 2 single programs will be moved. We are very careful not cannibalizing on the Sweden fab. We think it is business enough with new customers and new programs for the U.S. fab.

Does that include -- I mean, this 1 to 2 projects that might be moved, does that include one of the largest customers perhaps?

Yes. Well, it could be so, one -- especially, one large customer, which is growing out from the Sweden fab, which is a good solution.

All right. Okay. Makes sense. Just a final question from me. I mean you said that you aim to reach breakeven here by 2029, 2030. Is it possible to say anything sort of about the size of the anticipated losses prior to this? Any guidance there would be great.

No. We don't guide on that actually. So you maybe can do your own calculations. I think -- at the current stage, we don't guide on that. You know the number of employees and you know, I think we -- you have to do your explanations yourself today.

Yes. I'll do my own calculations. Excellent.

The next question comes from Simon Granath at ABG, please go ahead. Simon Granath, please unmute your microphone.

Can you hear me now?

Yes.

Sorry. Congrats on signing the deal, exciting stuff. On Erik's question, you mentioned positive feedback. May I ask which end market segment that you hear most positive feedback from?

It's generally and it's -- I can say that we -- Mag 7 companies, of course, they have been pushing this since day 1. This is something I've communicated all the time. And also, generally, tech companies are very interested in this, because of geopolitical situation, that is important for them.

Very good. And may I ask, do you expect to receive any grants from the CHIPS Act, et cetera, does such -- given your investments?

Maybe, Maria, you can comment on that.

We always look into grants. And of course, in this case also. But there's nothing we can communicate right now. But we're aware that there are grants available in U.S., both federal and locally. So we're always looking into this.

Perfect. And you mentioned that you have hired about 25 people in Sweden that are, as I understand, earmarked for the U.S. expansion. Do you expect to hire even more people in Sweden and then gradually transfer them? Or is that enough to 25 people?

This 25 is engineers, and I think this is a good model to hire them and hire engineers in Sweden fab and train them here, and then move them to U.S. I can see that it's coming more tranches of this. Yes, I can see that. It can happen.

Okay. And just a final one for me. In your view, what are the key risks that you have identified pursuing this expansion?

It's always a risk that a new location, a new fab is challenging for a company like Silex being only in 1 site. Suddenly, we have 2 sites to take care of. I think that's the main risk. A second site on a second continent, I think rather -- it's a lot of opportunities you should look at. That is the big thing with this. It's -- I don't see so many risks, but more than we are a small company, even if we are 500 employees, it's a big challenge for us, but huge opportunities.

That's very fair. Thanks for having my question and looking forward discussing this further at the Q2 results.