Soitec SA (SOI) Earnings Call Transcript & Summary

Hello, and welcome to the Soitec H1 '25 Results Analyst Call. My name is Saskia, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to Pierre Barnabe, CEO, to begin today's conference. Please go ahead.

Hello, everyone, and welcome to Soitec H1 '25 results conference. I'm Pierre Barnabe, Soitec's CEO, and I'm very pleased to be with you today, along with Lea Alzingre, our CFO; and Steve Babureck, our EVP, Strategy. Then let's look at the disclaimer, you know by heart. Then we have a lot to cover today. I will share the main highlights and drivers behind our H1 '25 performance, and Lea will address the financials. Let's start with the highlights of our first semester. Our H1 '25 financial performance was in line with our expectations. Revenue reached EUR 401 million, down 15% year-on-year, as we had announced at the beginning of the fiscal year. This essentially reflects significant RF-SOI under-shipment to some of our foundry customers in the context of inventory absorption across the smartphone value chain. Our 33% EBITDA margin demonstrates the positive contribution of new products and the resilience of our operating model in the context of a lower revenue. While we strictly control our cost base, we continue to significantly invest in R&D for new product development and in our capacity expansion. Finally, the significant improvement in our cash generation with EUR 129 million operating cash flow supports our positive free cash flow of plus EUR 35 million in the H1 '25. This strong operating cash flow allows us to continue to invest in R&D and agile capacity deployment. Looking at our revenue from a quarterly perspective, our Q2 performance confirms what we announced in May. We have started to rebound from our Q1 '25 bottom with more than 85% sequential increase in Q2 '25. Our revenue performance reflects different dynamics across our 3 strategic end markets. Let's start with our Mobile Communications division, which delivered a significant rebound on Q2 '25, up 164% over Q1 '25. The H1 '25 revenue performance in our Mobile Communications division, down 32% year-on-year, reflects the inventory absorption among some of our foundry customers, which continue to impact RF-SOI as anticipated. Customer inventories are stabilizing around 1 year on average, which seems to be the new normal. And we are confident that the improvement in RF-SOI inventories will support a rebound in H2. Beyond RF-SOI, we continue to make significant progress in the adoption of new products in 5G smartphones, Wi-Fi 6, 6E and 7 as well as applications beyond mobile such as 5G infrastructure and satellite communications. POI continues to ramp very fast with 10 customers in production and more than 10 in qualification. Our products has been endorsed by all key U.S. players and volumes are driven by a strong appetite worldwide. FD-SOI adoption for both sub-6 gigahertz and millimeter wave continues to expand as all major players have selected our products. On the end market side, we anticipate the smartphone market to return to growth in 2024 and 2025 in the low single-digit territory, while 5G continues to grow. Let's move to Automotive & Industrial, where the weakness across the market has impacted our H1 '25 revenue, down 20% year-on-year. In a flattish light vehicle environment, the automotive semiconductor market is set to grow at a modest mid-single digit this year before recovering above 10% in 2025. We continue to see increasing adoption of our products and growing content per car, driven by the increase in infotainment, autonomous driving, functional safety and electrification. On Power-SOI, inventory adjustment at customer level has impacted our revenue in H1 '25. FD-SOI adoption continues to progress rapidly with leading foundries and IDMs developing products, such as GlobalFoundries design wins on 22FDX and STMicroelectronics recent 18-nanometer adoption with production expected by H2 2025. On the SmartSiC side, we continue to see a growing appetite. We are pleased to announce a fourth customer in qualification with the addition of a significant player in Asia. On top of these 4 customers, the number of prospects evaluating SmartSiC has grown from around 25 before the summer to 35 today. Electric vehicle penetration continued to grow at a lower pace than last year. Qualification cycles on the SiC value chain are lasting around 2 years longer than anticipated as we already shared in July. Our fab is ready to start ramping up in line with customer qualification. Our Edge & Cloud AI division continues to grow, up 57%, driven by a strong appetite for low-power computing devices and edge AI applications. The increase in revenue was driven by higher sales of Photonics-SOI, which benefit from the AI-driven growth in data centers capabilities and by a positive phasing effect on Imager-SOI. On Photonics-SOI, we continue to leverage the strong cloud AI momentum in the industry, evidenced by high CapEx commitments across the AI value chain. We are accelerating our partnerships with leading-edge fabless to support AI/ML developments. Co-packaged optics enable new data center architectures with better performance, energy consumption and lower costs, a critical challenge for the artificial intelligence value chain. On FD-SOI, our product portfolio continues to expand, supported new generations and extending beyond general purpose into AI computing. Strong customers' appetite with new product adoption and committed capacity investment support our product road map. Finally, on Imager-SOI, we are sampling second-generation wafer dedicated to higher performance sensing applications as we will progressively be phasing out Imager-SOI first generation. Let's now have a look at the sustainable deployment of our expansion. We have set very ambitious long-term targets on the key pillars of our ESG road maps, dividing by 2 our water consumption by fiscal year '30, reducing our Scope 1 and 2 emissions in absolute terms by 37% by 2030, improving the diversity among our employees towards 40% by fiscal year '30 and delivering on our 5 ethics key pillars. We continue to progress on our targets. On the water front, we have already passed 40% of recycled water in our processes on our way to our 50% target by fiscal year '30. We also shared important news on the governance side yesterday with the appointment of Frederic Lissalde as Chairman of our Board of Directors effective on the 1st of March 2025. I am delighted with this decision, and I look forward to benefiting from Frederic's experience and vision. I would also like to express my deep gratitude to Christophe Gegout for his trust and guidance during this transition phase. As of March 1, '25, Christophe will resume his former roles as Reference Director and Chairman of the Audit and Risk Committee, and he will continue to serve on the Strategic and ESG committees. Let me now hand the microphones to Lea in order to comment on our financials.

Thank you, Pierre, and good morning to all of you. We have met our revenue guidance for H1 of minus 15% year-on-year as we still navigate the complex environment. We are monitoring very closely market conditions and inventories at our customers. We continued our financial discipline to maintain profitability while preserving investments and our 4 strategic priorities remain unchanged. One, extend our technology leadership; 2, accelerate our diversification beyond RF-SOI products; 3, ensure we have a relevant positioning in terms of products and the appropriate cost structure; 4, optimize value creation for all our stakeholders. Let's start with the main takeaways of our H1 '25 earnings. We delivered EUR 338 million in revenue, down 15% year-on-year at constant FX rates. We maintained strong profitability with a 33.4% EBITDA margin. Our EPS is down year-on-year, reflecting the lower loading of our fabs and the level of revenue during the period. At the same time, we managed to generate positive free cash flow at EUR 35 million with strong monitoring of our working capital, while we continue to invest in our future. And we maintain a healthy balance sheet with a moderate net debt at EUR 51 million. Pierre already commented on the revenue performance. Let's move directly to our gross margin. We delivered a 30% gross margin, down 6 points year-on-year, in line with our expectations. As anticipated, we faced 3 main headwinds: one, higher depreciation expenses as expected; 2, under utilization of our SOI fabs, especially in France in 200 mm and in Singapore in 300 mm; 3, a lower revenue as explained earlier. These unfavorable effects have been partially offset by a strong industrial performance with improved yields and efficient agility in resources allocation between our fabs, a highly effective cost control program and favorable effect of brands. Gross margin is and will remain a key priority for us. As explained in May, we anticipate our FY '25 gross margin to be almost stable year-on-year between 33% and 34%. The main drivers of the gross margin improvement between H1 and H2 will be a higher operating leverage coming from a better fab loading and a much higher revenue and a more favorable product mix. Let's move now to the current operating income, which reached EUR 28 million, an 8.2% margin as compared to 21.3% in H1 last year. We continued to significantly invest in innovation with gross R&D expenses before capitalization up EUR 12 million, a 90% increase, reflecting our priorities to: first, reinforce our technological leadership in each of our 3 end markets and across all product lines; second, increased efforts in upstream R&D, hire talents and continue to build collaboration with innovation platforms. At net level, R&D expenses were up EUR 9 million. SG&A expenses amounted to EUR 31 million, up EUR 6 million year-on-year. This increase is mainly due to an unfavorable comparable basis with non-recurring effects in H1 '24. Without this, the increase would have been less than EUR 2 million. At the same time, we maintained our financial discipline. Finally, our 33.4% EBITDA margin is almost flat year-on-year. The decrease in EBIT margin has been offset by the increase in non-cash items, mainly depreciation expenses and non-cash effect on inventory. Taking into account a EUR 4.3 million depreciation on Dolphin Design goodwill, our operating income reached EUR 23 million. Moving now to the bottom of the P&L. Regarding financial results, it was a loss of EUR 8 million compared to a gain of EUR 2 million last year due to the FX result, a loss of EUR 6 million this year versus a gain of EUR 3 million last year. Our income tax continued to benefit from tax loss carryforward, but was also impacted by the effect of the new Pillar 2 regulation. As a result, net income reached EUR 14 million, representing around 4% of revenue. Let's move to our cash flow. We generated a positive free cash flow of EUR 35 million in H1 '25, a significant improvement of EUR 120 million compared to the EUR 85 million negative free cash flow last year. Despite the lower EBITDA, this strong increase essentially comes as a result of a much improved working capital over the period, while sustaining capital expenditure. We generated EUR 129 million operating cash flow compared to EUR 45 million in H1 '24. This strong improvement was due to the working capital decrease by EUR 27 million, explained by EUR 130 million decrease in trade receivables due to the seasonality of the activity and the good performance in terms of cash collection. This favorable effect being partly offset by: one, an increase of inventory in anticipation of the H2 deliveries for EUR 65 million, same as last year; 2, a decrease of EUR 48 million of trade payables versus a decrease of EUR 105 million last year. As you may remember, in H1 last year, we had non-recurring down payments to suppliers to secure long-term supply agreements. Last, we had a favorable effect on tax paid with a decrease of EUR 9 million as compared to the same period last year due to tax reimbursements over the period. Let's continue with cash out from investing activities at EUR 94 million, which reflects EUR 120 million of cash out from CapEx, partly offset by EUR 17 million of leasing contracts and EUR 9 million of cash in -- from cash investments. We invested our CapEx for capacity increase for POI, SmartSiC tools to complete our 2 production lines for 150 mm and 200 mm, respectively. In Singapore, for the continuation of the first step of our fab extension, and we also had ongoing investments in innovation, sustainability and automation. Moving to the balance sheet. Our financial structure remains very healthy with solid equity, strong cash position and low net debt. Let me highlight that we reclassified EUR 65 million assets and EUR 33 million liabilities from our subsidiary, Dolphin Design following the decision to sell this business. The assets related to the IP business has been sold to Jolt Capital on the 31st of October. And we signed an agreement with NanoXplore on the 11th of November regarding the sale of the assets related to the ASIC business. Regarding net debt, we ended the period with a moderate net debt at EUR 51 million, up EUR 12 million. The generation of positive free cash flow for EUR 35 million has been offset mainly by the increase in gross debt due to new leasing contracts for EUR 49 million, including the second tranche of our [ Bernin 4 ] fab. This concludes my comments on H1 '25. You can see that despite the decrease in revenue, we maintained a good level of profitability, and we generated positive free cash flow while continuing to invest for the future. We are taking actions on all items we can control, such as operating expenses and CapEx, and we are well prepared for the revenue rebound in H2. Let's focus now on the outlook. I will now hand over to Pierre to comment on our revenue and EBITDA guidance confirmation. Thank you for your attention.

Thank you, Lea. And now let's have a word on our guidance. We confirm our fiscal year '25 guidance for a stable revenue and a fiscal year '25 EBITDA margin at around 35%. We are confident in our ability to extend our rebound in the second part of our fiscal year, notably for the fourth quarter as the RF-SOI inventory levels started to improve. Our confidence is supported by around 90% backlog and contract coverage today and strengthening customer intimacy as evidenced by new products launched with key foundries on 300 millimeters SOI. Our strong H2 recovery will reflect different dynamics across our division. Year-on-year growth in Mobile Communications will be driven by continued strong momentum in POI in filters and RF-SOI volumes recovering from their Q1 '25 bottom. Customer inventories are stabilizing at around 1 year on average, which seems to be the new normal. In Automotive & Industrial, the growing penetration of our products will continue to be offset by the ongoing weakness in the automotive market. Edge & Cloud AI will continue to benefit from a strong momentum driven by artificial intelligence, both at the edge and in the cloud. We are also confirming our EBITDA margin around 35%. As Lea mentioned, we anticipate a strong rebound in our H2 gross margin. Fiscal year '25 should be in the same range as fiscal year '24 between 33% and 34%. We'll continue to control our cost while benefiting from a higher operating leverage, driven by a better loading of our fabs, continue to invest significantly in R&D to prepare for the future and continue to manage our SG&A expenses. Finally, the third element of our guidance, we are adjusting our fiscal year '25 CapEx guidance to around EUR 230 million from EUR 250 million in order to reflect a moderate rebound in end demand in calendar 2025, both on SOI and SmartSiC. To conclude, we are very confident that our fundamentals will allow us to grow next year in the context of challenging market conditions. For calendar year 2025, we anticipate different dynamics across our 3 end markets. The Mobile Communications market is expected to continue to slightly improve. The Automotive market weakness should persist through the first half of the year. In investment across the cloud AI infrastructures are expected to remain at elevated levels. In the context of these temporary challenging market conditions, we continue to enhance our technology leadership to strengthen our SOI positionings with both existing and new customers and to deploy our expansion into compound semiconductors with the acceleration of POI volumes and a fourth qualification initiated on SmartSiC. As you see, we continue to deliver on our diversification strategy. At the end of fiscal year '25, 4 product families will contribute to more than $100 million revenue each compared to only 1 a couple of years ago. 2 other products are strong candidates to pass this milestone in the mid-term. This concludes our remarks. Thank you very much for your attention. Now it's time to move to the Q&A.

[Operator Instructions] And our first question comes from Aleksander Peterc from Bernstein.

So I have a couple. The first one will be on mobile. I'd just try to -- I'd like to understand where you stand now with the sell-in versus sell-out of the channel overall. So can you confirm that the level of inventory now at foundries is such that there will no longer be a massive under-shipment into the channel in the second half? Will we see that equilibrium now in place in H2? And just to give us an idea, in H1, to what extent have you under-shipped, i.e., how much more of SOI was sold in the broad smartphone market versus how much you have shipped? Then secondly, on SmartSiC, could you give us an idea at what point in time you think you'll enter into volume production for this product line? I'm under the impression we have a 2-year delay here in qualifications, at least the major ones. And I'm just wondering if this gives a longer runway to mono-silicon carbide products that can progress lower on the cost curve of the substrate and that would surely put pressure on your SmartSiC product economics. So if you could just give us a little timeline and idea of the economics here? And just lastly, very quickly, what are your plans for the '25 convertible that matures in October? Will you roll it to interior finances at all? Or will you just pay it down as it's now out of the money? What are the plans there?

Thank you, Alex. Then for the first part, the Mobile Communications, what we observed is by the end of this year is a stabilization of inventories around 1-year average, meaning that, of course, we see a positive trend for the second half in the RF-SOI because consumption rates continue to be there, of course, to sustain 3% smartphone market increase this year and 3% next year. This is the visibility we have so far. And we state, let's say, progressive recovery in this area. Taking into account, again, that it's RF-SOI, in Mobile Communications, as you know, we have 2 other components that are POI and FD-SOI that are doing very well and with a strong growth in POI adoptions with more and more customers. Regarding SmartSiC, as we already stated, there is a 2 years delay compared to the original plans we had a few years ago due to time of qualification and adoption process of silicon carbide, generally speaking, and SmartSiC. We are, as you know, ready for, let's say, ramping up our productions. The different milestones regarding technology, supply chain, operations and customers are passed and the next one is going to be passed. What is super important is to get a fourth qualification now with the customers in Asia; 35 under evaluation. I don't -- we don't expect the 35 to shift into qualification. Why not? But some of them are going to go there. And we are on a good traction, but the market is taking a bit more time. It's not an issue to get these delays regarding the pressure on the price. As we said already, first of all, we are benefiting -- we are observing the pressure on the prices in silicon carbide on the 6 and 8 inches. First of all, we are benefiting from this drop because we are taking -- we are buying a part of monoSiC product. Second, we are working on the 2 other elements of the SmartSiC, meaning process and polySiC to really be in a position to follow the curve. And we are working on plans to remain competitive including a premium because, of course, we are not making, I would like to say, a material solutions that is monoSiC. We are making a product that is bringing added value. And this added value are more and more recognized. The fact that we have a better concentration of dies, the fact we are reducing -- we are making CapEx avoidance, we are reducing CO2 consumption is something that is totally stated and understood by our prospects and customers. And we're really working very hard. We are not at all immune or blind. We observe the market. And I can tell you, we are extremely active to follow the trend and to continue to be super competitive while investing in R&D in this domain. For the last question regarding the convertible, I will leave the floor to Lea.

So, yes, currently, we are working on several scenarios. And based on both our needs of financing for this convertible bond and also mainly on the market conditions. So we will decide, I would say, until the end of March, what will be our refinancing scenario and we will execute on the first half of next year.

And we now move on to a question from Emmanuel Matot from ODDO.

[Foreign Language] Emmanuel from ODDO. I have, let's say, 3 questions. First, the level of sales growth is very impressive in Edge & Cloud AI. Is it sustainable? And when do you think Photonics-SOI will reach $100 million of annual sales? Second, it's too early to guide for sure for next year, but do you think that Soitec can be back to high growth, I mean, double digit? Is that a possible scenario or too early to be so optimistic? And third, you mentioned that customer inventories stabilizing around 1 year on average for RF-SOI, which seems to be the new normal. But what was the normal historically, let's say, before COVID? Was it very different? And if yes, why such a change in the value chain of RF-SOI?

Emmanuel, thank you for your questions. And let's start with the Edge & Cloud AI. Edge & Cloud AI, there are several components. We have Photonics and Silicon Photonics is growing very fast. And we see this trend, should it be in the range of plus 60%, perhaps it's a very exceptional growth, but we will get a strong growth and intense growth in Silicon Photonics because there is more and more needs to sustain the data center deployment, next-generation data centers deployment. Today, we can say that there is no new next-generation data centers AI deployment without Silicon Photonics. Then each time you have a next-generation data centers bringing AI, you have Silicon Photonics. All the transceivers today are going to this type of technology, that it is sustaining the growth. But of course, there are other components in the Edge & Cloud AI. You have FD. FD is doing quite well with the general purpose adoptions, but there are some new design wins to come. It will take a bit of time. And there is also the major for which, as we said, we are now in the first generation that will progressively get down. And we are working on the second generation. Then it's going to be, of course, a mitigated analysis of the trend in Edge & Cloud AI. But what is clear is that Silicon Photonics is going to continue to grow very, very largely for data centers. But also we need to think on other applications around Edge, around Co-Packaged Optics for interconnection within [ GPU ] in the future. Then in the coming years, we see many applications around AI that's going to adopt Silicon Photonics because it is quicker, it is more secure in bandwidth and also supporting very high bandwidth, and it is consuming less energy that is today at stake, as you know, to sustain the AI explosions. And that's something that is a key element. Regarding fiscal year '26, as you can guess, and you've got the answer in your question, it's too early to give you really more colors. What is very important is what we said about the market because we are, of course, observing the market for '25. Then for '25, we see a slight recovery on mobile. We see still a first difficult semester on auto. And we see a good traction on Edge & Cloud AI, thanks to Silicon Photonics. That's it for the moment. But as you know, we are in a process of -- after having analyzed the market, we are looking at division per division, what the trends for the coming years, and then we're going to deliver to the Board our view for the budget fiscal year '26 by end of March. And then by springtime, you're going to get the color of the growth. Regarding the last point for the inventories, as you know, it's a new normal we are observing. It is higher than what was the kind of normal before COVID. The normal before COVID was more in the range of 8 months -- 8 to 9 months. Why we see this around year new normal as a kind of stabilization of the inventory. It is coming from the fact that you need 6 to 9 months from the time you put the engineered wafers in the factory of the foundries or the IDM to have the devices packaged and shipped, then you need 6 to 9 months. And then as you know, more and more fabless or integrators are asking for getting design wins, the foundries or the IDM to justify that they have in the inventories, the product, the wafers. Then if you take a buffer security, you reach this 1 year as a new normal. This is the explanation of this observation we have made.

And from Kepler, we have Sebastien Sztabowicz with our next question.

The first one is on the guidance for 2025. So you are confident, but it requires a very strong acceleration in the back half of the year. And you are mentioning a 90% backlog coverage, but this is more or less in line with traditional backlog coverage that you have at this point of the year. So what is making you, I would say, confident to reach the outlook as you missed it, say, a year ago with the same backlog coverage? That will be the first question. The second one is a positive one on Silicon Photonics. We have seen a very big buzz in the market coming from Asia, Taiwan, Semicon or STMicro yesterday, quite bullish on silicon foundry services and so on. Just to understand, do you see some upside on the previous message that you forecasted or past 2 investors, 30%, 40% growth on Silicon Photonics for the coming years? And second one, do you have any indication on the potential addressable market by the end of the decade? What could be the number of wafers that you can ship by 2030?

Okay. Seb, on the first question regarding the coverage based on backlog and contracts at 90%, it is an improvement compared to last year at the same period because we are more in the range of 80%, then it is increasing the level of confidence. That's the first key element. The second element is the sentiment we are getting, thanks to new type of conversations with customers that are coming back to us to really engage discussions for long-term agreement, multi-year agreements. That's something we are observing for a few, let's say, weeks and months now and quite encouraging. And regarding the remaining 10%, it is -- of course, it is based on, let's say, identified and clear business in terms of product, volumes, customers and value. Then it's not something, some deals we need to raise and to create. There are already identified elements. Then that is giving us a certain level of confidence to reach the guidance for fiscal year '25. Regarding the Silicon Photonics increase, it's too early to give you a CAGR today year after year, and it's going to be part, of course, the disclosure of [ our BP ]. But what we see clearly is a need that is increasing. First of all, for what we are addressing today, it's mainly transceivers' activities for the data centers, where we see -- you know the value chain very well, then there are more and more asked by players in data centers, AI constructions. And we see this growth to be sustainable on the long run. But they are not the only applications. There are other applications that are going to use more and more Silicon Photonics. We are talking about Cloud particularly today. But at the Edge, the use of Silicon Photonics and particularly the Co-Packaged Optics going to be a very important driver. And it's going to go to the GPU level because the interconnections between GPU today on the top of the components. On the long run, it will be difficult to be sustainable because it consumes a lot of energy. You have a very small but still latency. While having Silicon Photonics interconnecting GPUs at the substrate level is, of course, a very big gains in terms of latency, bandwidth and power consumption. That is, as you know, the risk of bottleneck of AI explosions. And that's something in which we are confident. And we're going to give you more, let's say, color when our business plan exercise is going to be complete on the different products. And to your -- to the question of would it be $100 million product drivers? It's again too early to say, but we're going to give you more details in the coming months, but very encouraging and promising products for sure. As I say, it's in the long term of time.

And up next, we have Olivia Honychurch from Jefferies.

Just a couple from me. Another one on the RF-SOI wafer side. You talked about the new normalized level at your foundry customers. Looking ahead, then, to what extent do you expect those foundries to start building inventories back up through H2, particularly if there is still some more clearing to go, as I think you mentioned in the press release yesterday, perhaps that's only at a couple of customers. But generally speaking, how much replenishment do you need at those foundries to get to your FY '25 guidance? And then I have a follow-up.

Well, it's important to, I believe, underline the word of stability, okay? Then we are to a new normal that is higher than years ago, okay? But this normal seems to be stable. Is it also an expectation by the foundries and the IDM of higher consumption rates for the future? Maybe. What is clear is that progressively, we see the improvements. And we remain, of course, cautious but ambitious. And it's also very important to keep in mind that we are coming also to a kind of new normal in terms of smartphone growth, because we experienced double-digit growth in the past years in the years 2010 and the decade. Now if we take this year and next year, we're going to be more in the range of plus 3%. Then there is also a kind of overall stabilization of the supply chain in the range of this low-digit percentage of growth, okay? Of course, still the elements under, let's say, discussions is how AI going to impact the refresh of smartphone, I would like to say, inventory in the world. We will get AI applications that will make the individuals obliged to change their hardware to sustain new type of revolutionary applications. This is another discussion. But short and very midterm, it is clear that we are coming to a progressive recovery based on a 3%, few percent increase in smartphone business, while 5G continues to progress, but at also a progressive path. Then this is really something we need to keep in mind. I'm talking about RF again. It's really around RF because POI is in another dynamic. POI is in a penetration mode, then POI is getting shares in the existing cake, okay? While RF is expanded and is, I would like to say, mature in terms of positioning. POI is penetrated quite rapidly and hitting really segment shares more and more.

Great. I guess maybe a couple more actually in that case. The first is just based on your comments just then, how do you see content growth going forward? Is it sort of in line with the year's levels previously? Or do you see that going up because of the various dynamics that you talked about in the next year or 2 perhaps with the AI smartphone trend? And then my second question is a little bit broader. So you've obviously maintained your FY '25 guidance. At your Q1 results, you gave sort of slightly more color at the segment level. So you were talking about 0% revenue growth in the Auto side and I think double digit in Edge & Cloud AI. Are those segment level outlook statements still valid? Or has there been a change in the mix given what we've been seeing in some of your end markets?

Okay. Then back to your first question on the content, then we see still an increase, of course, in the RF content because there are more and more applications to be sustained and 5G is making its job, of course. This increase in content in RF is also helped with additional millimeter square, let's say, increase, thanks to, again, POI and also a bit of FD-SOI for the millimeter wave share that is today stabilized around 10% to 15%. And of course, other applications like satellite communication, envelope trackers and so on. Then we see the content to continue to increase by adding these different products within the smartphone. If we look at the structures of, let's say, and the weight of the different divisions within the fiscal year '25, let's say, outlook, of course, RF-SOI at the end of the year going to weigh less than 50% more or less, because the dynamics of the other product is quite impressive because when you imagine that this year, 4 product lines going to hit more than $100 million each that was not the case even 2 years ago. Of course, there is a change in the weight of the different divisions, reflecting the markets and reflecting also the penetration of our new products that were very low -- that was very low 2 to 3 years ago. Then it's really a change in paradigm because this diversification now is going. It's a pure and simple reality. Then it will make, of course, a change in the weight of the division. We need to think also mid-term. Mid-term, whatever automotive market this year and first semester of next year are going to be soft. The need for electric vehicles is still very active. I mean, if you look globally of the growth of electric vehicles needs and sales, it's still quite high. Then the need for components to sustain this type of development are eligible to our engineered substrates, whatever it is SmartSiC, Power-SOI, FD-SOI. But also we could imagine to have RF-SOI and Photonics-SOI in the cars tomorrow. Then it is clear that we need to look on mid-term on the balance between the different divisions. We still believe that we're going to be in the range of 50%, 60% for mobile and 20%, 25% for the 2 other divisions, sustained by the growth of the different products within this division. Then it's very important to keep that in mind. But we're going to give you again more, let's say, accuracy and update on these dynamics after the BP exercise by springtime.

Okay. Great. And just to clarify, you are still expecting flattish revenue growth in the Auto division for FY '25?

We are expecting, yes, our guidance is to have a stable revenue fiscal year '25.

[Operator Instructions] And up next, we have Adithya Metuku from HSBC.

So a couple of questions from me as well. So firstly, we've seen a lot of mixed data points from the RF guys in the last quarter. We've seen negative headlines around iPhone demand. We've seen negative data points around automotive and industrial end markets. We've seen your -- STMicro, your customer cut outlook warn about seasonality in the March quarter, which is your last quarter where you're expecting a significant recovery and yet you're keeping your guidance unchanged. So how -- I just wondered if you could help me reconcile the data points I'm seeing and what you're seeing that is leading to you keeping your guidance unchanged? And then I have a couple of follow-ups.

Well, it's an overall comment on the different product lines. But what we see is for the fiscal year '25. We see RF, let's say, development and shipment as planned to the initial -- that's what we were expecting initially, okay? Then RF is in line with what -- the way we built the guidance early this year. Automotive, as we say, is a bit weaker than what we are expecting. But it is -- and we said it already in July this year, but it's going to be compensated by good traction on other products, particularly Edge & Cloud and particularly Silicon Photonics and FD-SOI. Then you have RF really in line with the expectation. POI in line with the growth expectations we have designed at the beginning of the guidance. Auto, as we said already, is nothing new, a bit weaker than the initial plan, compensated by good tractions on Edge & Cloud AI, and particularly Silicon Photonics. Then it is showing also that the company is able to be flexible, and this is also one of the strengths of the company. We are resilient in terms of -- as it has been underlined several times by Lea, we are resilient in terms of profitability and cash because despite some up and down within the quarters across the year, we are able to be flexible in terms of topology of productions and in our capacity to react in customer demands. And that's, I believe, a very important signal that around our diversification, our flexibility is bringing a lot of resilience and adaptive, let's say, capacities, capabilities to the company and to the group, whatever it is in Bernin or in Singapore.

Understood. And just as a couple of follow-ups. Are there any non-cancellable orders? Or is there anything like that, that you're shipping into your customers, which your customers are taking because they have to and not because they want to? Is there anything like that, that we need to be aware of that's going on?

No. No, there is no -- absolutely no cancellation of whatever POs or whatever change in contracts. There is clear needs for the products we are preparing for them for our customers, then this is not at all something we are observing. We are observing, I would like to say the other way around. We are observing customers calling us, calling me directly to discuss long-term, let's say, commitments and even some common ideas to develop next features or next application in future platforms. And this is something that is quite new and giving a very interesting and promising signal.

Got it. My question was specifically around non-cancellable orders. So are there agreements that your customers have made previously that require them to take the wafers even if they don't need them? Is there anything like that, that is going on?

No, no, nothing like that.

And just lastly, so would it be fair to assume that your expectations by division have not changed specifically in the last 3 months for this year?

Yes, yes, yes, exactly. And the latest view and pictures we gave you on July with a softer automotive division compensated by Edge & Cloud AI, it's the right pictures that they're going to drive us to the guidance delivery.

And have they changed by product?

By product, it's a bit the same because we have not -- for the moment, 15 products by division, but then it's 3 products by divisions with some key ones. Then RF is dominating mobile while POI is getting more and more, of course, territories. Automotive is largely driven by power, whatever FD-SOI is getting more and more traction, while SmartSiC is in adoption mode, as you know, and Edge & Cloud AI is driven by, of course, a good momentum on FD-SOI, but as I said, a very good growth and traction coming from Silicon Photonics. And they are the big dynamics within these divisions. It is a good demonstration of the large diversity of our products, but also our customers because we didn't talk that much about customers. We were expecting around 20 customers generating 90% of our revenue. We are on that trend. That's also a big change. It was not the case 3 years ago, where 7 customers were making 90% of our revenue. Then it's also a way to be diversified and to solidify also foundations and also reducing the risk and increasing visibility to some extent, on the top of, of course, China that is becoming more and more important.

And we move on to a question from Robert Sanders of Deutsche Bank.

Yes, 3 questions, if I may. The first question would just be, could you discuss your position in imaging? It looks like ST, one of your partners has got a new socket at a large customer. Just wondering if that is part of your plan to serve that socket win out of Kroll? And then second question would be on filters. Can you just talk a bit about your market share if we include Broadcom as a ball filter player within the potential served addressable market? How much share penetration have you had so far? And where do you think that you -- that can go, including potentially winning Broadcom? And then the last question would just be on the smaller diameters. I assume that the loading in those lines is pretty low, probably below 50%. Is there any scenario where you could reduce capacity, do a bit of restructuring in order to deal with that underloading?

Okay, Robert. Then on the first question regarding the Imager, I will not comment, of course, of any design wins and any customers', let's say, discussions in the overall supply chain. What I told you is that we are in the first generation of Imager that has been very successful. And of course, there are new type of substrates to sustain this, let's say, imaging capacities and capabilities. Then we are working on the second generations. Then we -- the first generation going to progressively, let's say, ramp down starting now for the coming, let's say, quarters. And we are working on the second generation. They're going to come later on, then we will have a transition period. But of course, we want to continue to be active in the imaging -- Imager's world till end of the decade. Regarding the filters market, we always said we want to reach 30% market share by 2030 in terms of overall filterings -- filters market with our POI. We see clearly this target in the line of sight because we are getting more and more tractions. As we said, there is a big shift, particularly appearing this year, where we are now equipping Western world providers. You have heard some announcement by some key integrators like Qorvo mentioning a next-generation POI. I don't say it's us, but you can guess that this type of announcement are extremely appealing and extremely promising. And there are other players, particularly in the U.S. who wants to really make the filterings elements and components more accurate and able to support a large scale of frequencies. And you can imagine that with our POI range of products, we are answering exactly the needs of the market as it is today. I continue to believe that this product is going to become a standard in our industry. For the loading of our factories, I'm going to pass the mic to Lea, who could give you some points.

So you are fully right, and during the first half, the loading of our 200 mm fab in Bernin was quite low. But for the second half, we anticipating a much higher loading, mainly thanks to Power-SOI product for our Q4 deliveries. And keep in mind that for our 200 mm SOI product, we are also working with our partner in China, Simgui. So this is a way for us to create flexibility and agility in terms of production.

Thank you. And that concludes today's Q&A session. So with that, I'd like to hand the call back over to you, Mr. Barnabe, for any additional or closing remarks.

Thank you all for following our H1 '25 analyst call and for the quality of your questions this morning. The next date in our agenda will be the release of our Q3 '25 revenue on February 5 after market close. This ends our call for today.

Thank you for joining today's call. Ladies and gentlemen, you may now disconnect.