Siltronic AG ($WAF)

Hello, everyone, and welcome to the presentation of Siltronic's Full Year 2025 Results. Please note that this call is being recorded and streamed on Siltronic's 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 Malgara, 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 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's 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 full year 2025 reporting are available on our website. I now turn the call over to Michael for his comments.

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 and queries, and the closure of our SD business. Importantly, sales in 2025, excluding SD and FX effects were on prior year level, which highlights the resilience of our business. The momentum in Siltronic's end markets 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 EUR 1.35 billion 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 EUR 369 million. Consequently, the net cash flow improved compared to the previous year, yet it was still negative at minus EUR 85 million. Finally, net financial debt ended the year at EUR 837 million, up from EUR 734 million 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 EUR 1.35 billion, down 4.7% year-on-year. On the positive side, wafer volumes increased in 2025 and 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 1/3 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 EUR 317 million. However, we were able to mitigate part of a 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 EUR 86 million, driven by the higher sales level and the resulting positive FX cost dilution. Full year EBIT came in at minus EUR 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 fab beginning in August 2025. This also impacted Q4 EBIT significantly, amounting to minus EUR 34 million. Net income for the year was minus EUR 78 million. In addition to the development of EBIT, rising interest expenses weighed on the financial result, reflecting the higher debt level. We also recorded a noncash 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 U.S. 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 the SD 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 SD closure for the first time. Let me elaborate on FX, as it remains a key factor for Siltronic. As you can see on the left, our business is highly exposed to the U.S. dollar. In 2025, more than 80% of our sales were effectively U.S. 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 in the euro-U.S. dollar FX rate of 1.13, a change of USD 0.01 would impact our full year sales by around EUR 10 million and our EBITDA by around EUR 7 million before hedging. To manage this exposure, we apply a structured hedging approach. We combined 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 EUR 4.8 billion, down 6% year-on-year. Property, plant and equipment totaled EUR 3.5 billion. We saw a reduction of around EUR 140 million in this position largely due to the Singapore dollar depreciation. Working capital remained broadly unchanged. The 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 EUR 130 million to EUR 531 million, while financial liabilities decreased by EUR 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 EUR 369 million in 2025. At the same time, cash payments for capital expenditures amounted to EUR 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 of 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 EUR 734 million at year-end 2024 to EUR 837 million at year-end 2025, a change of EUR 103 million. We generated a solid operating cash flow, underpinned by an exceptionally strong fourth quarter. This performance was shaped by 2 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 EUR 38 million 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 and pronounced 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 payables described earlier. In addition, we anticipate an increase in days 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 EUR 1.5 billion, of which around EUR 130 million 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 EUR 100 million and interest expenses are anticipated in the ballpark of EUR 50 million. As previously mentioned, we closed the 2025 financial year with around EUR 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 EUR 10 million, 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 pieces 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 the 200-millimeter remains challenging since inventories in some areas of the power supply chain are significantly elevated. We expect an almost flattish year 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 remained 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. Second, we've seen the 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 means that the larger big 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. Therefore, 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 3 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 1 to 3 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 U.S. 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 road map and continue to invest in maintenance capabilities and innovation. Secondly, we will continue our full scope 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-U.S. dollar exchange rate assumption of 1.8. On a comparable basis, meaning excluding FX effects and the SD line closure, we expect sales to be around the prior year level. For profitability, we guide for an EBITDA margin between 20% and 24%. We also expect a soft start into the year below average regarding sales and EBITDA 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 a regular depreciation between EUR 490 million and EUR 520 million, and therefore, EBIT is expected to be significantly below the previous year. Turning to investments. We expect CapEx between EUR 180 million and EUR 220 million. 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 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 the challenging market environment. 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.

[Operator Instructions]. The first question comes from Harry Blaiklock with UBS.

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 EUR 300 million being pushed out beyond 5 years. Wondering whether you could give some color on that? Is there anything to read from kind of from that on your view, your assessment on kind of midterm demand?

Yes. 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 time frame. But obviously, you see it's a quite nice effect for the year '26, where initial assumptions have been significantly above the number of EUR 10 million, which we report today.

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

Yes, 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 also or the amount. But of course, we are evaluating the options.

The next question comes from Constantin Hesse with Jefferies.

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 the -- on their call, saying that there are only 2 players in leading edge, i.e., he was referring to Shin-Etsu and SUMCO. So can you -- and obviously, Siltronic has obviously been saying for a long time that there -- 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, is there -- are there different -- are you just the leading edge in memory, not in logic? What exactly is -- just trying to get rid of this confusion, where exactly is the difference here?

Yes. Thank you, Constantin. You are right, there are indeed kind of leading-edge definitions around. Some, let's say, smaller ones are referencing to leading edge as not just being smaller than 5-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 SUMCO and Shin-Etsu and what the CEO said on his call was wrong?

So I don't reference to 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. Still a little bit confusing. But okay, number -- the question number 2 is just on the operating business. There are -- 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 it's 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 also -- basically also pretty close to utilized by the end of '26, and that would mean additional CapEx?

So thank you, Constantin. With regards to 300-millimeter, I think you are 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 got the most pricing pressure. We do not have any decision taking or any plans for restructuring or consolidation of whatever nature. But we're also monitoring the situation very carefully and we also listen, of course, to our peers being extremely vocal around this, which we are currently not there. But of course, we're also anticipating 200-millimeter be under some continued pressure also going into 2026, as we explained in the presentation. With regards to 300-millimeter, as you know, we are under middle of the ramp of our Singapore fab. We do not see an urgent need to add additional CapEx while even some CapEx spending 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 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?

So 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, 5 years, 4 years was a number we gave out. With demand as we see today, we -- 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 that.

Okay. And last question is to 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? That's it, thanks.

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

I meant rather if we look at over the next 3 years now with the development around cash, is it fair to say that we peak here or could...

Yes. 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, yes, I can't promise, but first half of 2026 will be a peak.

The next question comes from Martin Jungfleisch with BNP Paribas.

Also I have a few. Maybe starting with 300-millimeter pricing. In your prepared remarks your were talking about in 300 millimeter, you're seeing first reasonable spot prices. So maybe just to clarify what that means? I mean 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.

Yes. Thank you, Martin. Let me frame this a little bit. All what we said around pricing remains valid. So first of all, 2/3 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 much of the price pressure. And now, let's say, the new bit of information we give out today is that we see, for the first time, first examples with reasonable spot price in 300-millimeter. I would not speculate today more, but it's a first new bit of information, which we want to give today.

Okay. So it's more like a stabilization and then increase? Okay. And then my first on 200-millimeter. I mean, just business in LTAs, but in new contracts that you're signing, is there still incremental price pressure or is the price pressure that you're 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, that effect we have to accommodate in the future business development.

Okay. And then my final question is just on the input costs. I mean, you're in Singapore, Singapore relies quite heavily on natural gas for power generation. Just what's your view there on like any impact? Like do you have any hedges in place? And maybe also on the other side, if you see any impacts on availability of industrial gases, for instance, that you're using in the process like helium, et cetera, from the conflict in Iran?

Yes. Right now, we do not see any immediate impact, 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 #5 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 is true for gases. Supply chain is intact. So we do not have an impact here right now and we do not foresee it right now.

The next question comes from Robert Sanders with Deutsche Bank.

Can you just talk a bit more about the gap between spot and contract? It looks like spot 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 you think about that 2/3 percentage? I have a few follow-ups.

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 200-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 positive dynamics for the wafer industry.

Got it. And in FabNext, what are you actually doing right now? Are you -- have you stopped hiring? Are you kind of pausing the fab? I mean I think you got 200,000, 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?

Yes. I think we never talked about 200,000 or whatever in great detail. But we continue ramping. As I said, we are now since mid of the year where we announced that the 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-millimeter 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 fab. So I think it's a comfortable position. We can follow the demand. And currently, it's running very smoothly in ramping the fab.

Just last question. Have you actually reached cash margin parity in Singapore versus Burghausen? I guess, the reason I'm asking is you have more automation 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, breakeven always depends on how you will 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 breakeven points of certain fabs or specific fabs. But what I can say is that last year, we talked a lot about ramp 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 manage, but they dilute more and more. So with the volume that we bring in FabNext 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 fab, which is together with SSW one company. So it's -- we are -- yes, as I said, we are happy with the development there.

The next question comes from [ Mason Thompson ] with [indiscernible] Metzler.

[indiscernible] Metzler. A few questions. The first one on the LTA topic, do you face any LTA 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 1 goes, 1 comes. There's opportunities always even in market down situations, we said roughly we won't have 2/3 of our business in LTAs. That's not written in stone, but it's a, let's say, enough framework for us. And of course, we highlighted particularly around our fab in Singapore, 80% of the business there is in LTAs with -- did 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 and your sales will be roughly down EUR 70 million, 1 13 FX in average 2025 versus your guidance, 1 18, which means we have EUR 50 million FX headwind there. So then you expect a 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 2/3 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 the 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 assumptions, we will then go into very details of market share developments, et cetera. But you can assume that volume price and mix are game, so to say.

Got it. And it will be probably more the product/mix, right? So higher nonpolished 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 mix effect as well.

Got it. And then another question regarding the -- there was one of the previous questions already touching the leading edge topic. Or asked differently, if you are qualified for the really leading edge nodes and like TSMC, they built initial capacity for leading edge when they go to 2 nanometer manufacturing node. But later, they add more capacities as they move volumes to this leading edge, which then becomes kind of leading or not leading edge node at a certain point after 1, 2 years. Can you say that you keep your market share stable when this happens? I mean when TSMC adds more capacities to the former leading edge node and they expand the capacities, you still keep your market share stable versus when you initially qualified at this leading edge?

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 is -- has been communicated is, of course, we want to be and we are a technology leader on that, particularly focused on leading advanced specifications. So we have, according to our, let's say, analysis we have 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 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 wafers are needed in the same capacity as processing is needing more time and wafers, so to say, are certainly 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 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, then a mild recovery. Do you see any level of inventories in the industry, particularly in the auto where you can -- 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 affects 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 focusing on silicon, and that's what we are doing.

The next question comes from Gustav Froberg with Berenberg.

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?

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

Next question comes from Daniel Schafei with Citi.

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 of being done and 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 2%, 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 players, I'm just wondering, are you still kind of when you're stating market share, is that still among the four players? And how -- 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, 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, Iran 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 will be my first point. But what we see is definitely the kind of effect from the memory shortage and all the -- not all, but significant 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 Middle 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 call. But we are aware of those, let's say, announcements that are a bit more negative. On the other side, there are also some more positive on the industry around. So for the time being, we feel that the assumptions here are well set. But you're right, it's a kind of a watch case for the course of the year. With regards to your market share question, there are not 4, 5 players or even 1 more in 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 that 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 a local to local supply chain model, which is also supported by the China 5 years plan. And we also see that their ability is still not in a situation where they can do anything what we would call a 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 it's going to be less dependent on China supply for, let's say, geopolitical reasons. We see the China chip industry being burdened by some bans on the chip side, so they do not get advanced machines, et cetera. That means there is 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 start our annual report in '26 versus -- '25 versus '24.

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

Yes, we guided EUR 180 million to EUR 220 million for CapEx. And yes, we said EUR 200 million steady state CapEx on average over 5 years with some years being lower or higher. And this year is obviously lower than 200-millimeter -- than EUR 200 million, sorry, but we cannot disclose any further details on how much the maintenance CapEx. By the way, our steady-state CapEx is not just maintenance, is 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 EUR 200 million that we stated for steady-state CapEx.

The next question, a follow-up question comes from Constantin Hesse with Jefferies.

Just a very quick follow-up. Claudia, 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 EUR 100 million and your cash buffer running close to the EUR 500 million, as previously pointed to. I mean 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 upfront. You mentioned EUR 500 million 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 our cost and invest. And we want to make sure that liquidity covers several months of payouts for cash cost and invest. So EUR 500 million is not a fixed number that we have, so that as a general remark. And regarding interest rates. When we do financing, yes, that heavily depends on the instrument that you take. So for example, a convertible, for example, is much lower in interest rates compared to a term loan. So 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.

The next question, a follow-up question comes from [ Mason Thompson ] with Bankhaus Metzler.

Yes, [indiscernible] 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 wafers hit the market or you see the demand, it will take 1 to 3 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 serve level DRAM, so using that basically as HBM 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 6 to 9 months, particularly when customers are double ordering. There was always an incentive to bring capacities much faster online to grab market share of volumes. Why would that be 1 to 3 years this time?

So thank you, [ Mason ]. I mean, 1 to 3 years always starts the question when does 1 to 3 years start, we were not very precise around this. Yes, CapEx road maps have been again accelerated, but you have to have in mind that they also pulled a brake not so long ago now. So construction progress was interrupted and now is resuming and maybe it's also accelerating here and there. What we know, 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 factor is not fully fledged and running at full capacity. Of course, there will be first wave of 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. If you -- I mean on your -- 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. And 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?

No. 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, than maybe a year ago. Yes, that's absolutely right.

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

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

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

There are no further questions at this time. I will now turn the conference back to Ms. Malgara 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 this 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.