Hello and welcome to the Soitec FY 2020 Q3 Sales. My name is Val, and I will be your coordinator for today's event. Please note that this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero, and you will be connected to an operator. I will now hand you over to your host, Paul Boudre, CEO, to begin today's conference. Thank you.
Thank you, operator, and welcome to Soitec Conference Call dedicated to the publication of the third quarter sales of our fiscal year 2020. This is the quarter covering the period from the 1st of October to the end of December 2019. I am Paul Boudre, Soitec CEO. With me today are Sebastien Rouge, Soitec CFO, and Steve Babureck, Soitec Investor Relations Officer. As usual, we briefly comment on our sales performance, and after that, we will open the floor for two questions, so let's start with an overall review of our Q3 sales figures. We posted double-digit organic growth this quarter. Indeed, we achieved 11% organic growth in Q3. This is a lower growth than in previous quarters, but in line with our expectations, so at the end of Q3, we stand at 23% organic growth year to date.
But before, and perhaps this is the most important for today, we expect a very strong Q4. Indeed, we anticipate a sharp revenue growth in Q4, both sequentially and year on year. This is based on a strong order book, which is driven by demand from our Asian-based customers in both RF-SOI and FD-SOI. This means that we reiterate our full-year guidance for around 30% organic growth. On a reported basis, we achieved a 16% growth in Q320 compared to Q319. This reflects, as I said, an 11.3% organic growth, but also a positive currency impact of 4.1% and a minor scope effect of plus 0.5% related to the integration of EpiGaN. So let's now move to our sales performance by revenue type, starting with 150 mm and 200 mm. So compared to Q3 last year, 150 mm and 200 mm sales went up by 2%, excluding currency effects.
We had slightly lower volumes but a more favorable product mix. By type of products, we had a combination of further growth in RF-SOI 200 mm and a small decline in Power-SOI, and we also recorded our first volume sales of POI wafers for smartphone RF filters. As you know, these are 150 mm substrates produced in Bernin. We decided last September to increase our production capacity there. Demand is driven by the higher number of filters and the enhanced performance needed for smartphones. This is to cope with the increased number of frequency bands used in 4G and 5G. Filters built on POI allow a better signal integrity and reliable communication. If we now look at our 300 mm business compared to Q3 last year, 300 mm sales have increased by 19%, excluding currency effect.
300 mm sales were, however, a bit lower than in Q2, but I would like to remind you that we delivered particularly strong 300 mm revenue in Q2. And on the other hand, we experienced some slight year-end inventory management by some clients and changes in the product mix. But as explained before, we expect a very strong Q4 that will be mainly driven by 300 mm sales. Going back now to our Q3, 300 mm sales growth versus Q3 last year essentially came from RF-SOI 300 mm products. We see continuous traction coming from 4G, and 5G is happening. Demand is building up for both network infrastructure and smartphones, with more RF-SOI content being required to fulfill the need for more switches, more antenna tuners, and more lower noise amplifiers.
Regarding FD-SOI, after strong revenue growth in the last couple of years, we are now in a temporary revenue plateau. Through recent products announcement and design wins, we continue, however, to see further evidence of FD-SOI adoption. Let me give you a couple of examples. Google, for instance, has recently released Nest Mini, the latest generation of its voice assistant. Nest Mini is using a chip from Synaptics, which is built on 22FDX technology. The chip enables the integration of voice, audio, video, computer vision, machine learning, and security for consumer AIoT products. Another example is Lattice, a leading fabless provider of FPGA solutions. FPGA stands for Field Programmable Gate Arrays. Lattice has recently released a new FPGA platform called Nexus, which is built on 28-nanometer FD-SOI technology.
With this platform, Lattice is enabling the rapid development of multiple devices that deliver up to 75% lower power consumption, two times faster video connectivity, and 100 times lower soft error rate. This platform is perfectly suitable for edge AI, ambiguous visions, and security solutions. So finally, we were also very much encouraged by the outcome of CES 2020 event last week. We saw there the confirmations of a massive trend in the deployment of IoT, AI, 5G applications across a large range of consumer goods. Finally, to complete the review of our 300 mm sales, we also had a good revenue performance for our Imager-SOI in Q3. For the foreseeable future, Imager-SOI remains the right engineered substrate solutions for some 3D sensing applications for smartphones. So let's now move to royalties and other revenues.
This segment has grown from EUR 5.2 million in Q319 to EUR 8.3 million in Q320. This represents a 41% growth at constant exchange rates and perimeter. So on the one hand, we had a slight increase in royalties and IP revenues at EUR 1.4 million . On the other hand, we had very good contributions from Dolphin Design. Dolphin's revenues are up 57% compared to Q319. So this shows how much the performance was improved since we acquired Dolphin's asset at the end of Q219. As a reminder, Dolphin Design is one of the leading IP providers of power management solutions for IoT, automotive, and smartphone semiconductor chips. So for example, Dolphin has already commercialized body bias solutions for FD-SOI-based chips, where we will be soon on the market. As indicated at the beginning of this call, we confirm our guidance for fiscal year 2020.
Q4 sales will be very strong, and we will achieve around 30% organic sales growth in fiscal year 2020. Q4 growth is based on our order book, with a sharp increase from our Asian customers, and especially in RF 300 mm, but also FD-SOI, and as you know, we have done some anticipated manufacturing over the past few quarters, so there will be no capacity issues to deliver this strong expected growth. In the meantime, we continue to anticipate fiscal year 2020 electronics EBITDA margins to reach around 30%, so regarding fiscal year 2021, as you know, we are still in the middle of our budgeting process for the fiscal year 2021, and we will share our guidance next June when we release our fiscal year 2020 financial figures.
However, given the multiple questions following the release of H1 figures last November and our CapEx reductions for fiscal year 2020, we can share with you that we are currently expecting an organic growth in the range of 10%-15% for fiscal year 2021. But again, our final guidance will be disclosed next June. Of course, as discussed in our capital markets day last June, we are also reiterating our mid-term revenue target around EUR 900 million for our fiscal year 2022. So before moving to Q&A session, I wanted to quickly remind you of the announcement we made during the quarter on silicon carbide. Indeed, we announced mid-November the launch of a joint development program with Applied Materials on next-generation silicon carbide substrates.
To give you some follow-up on this, as planned, a silicon carbide engineered substrate pilot line is currently being installed at the Substrate Innovation Center located at CEA-Leti. We benefit from Applied Materials expertise in process technology and equipment. We continue to expect this pilot line to be operational by the first half of calendar 2020, and we confirm that our goal is to produce silicon carbide wafer samples in the second half of 2020. Silicon carbide is part of our broader strategy to expand beyond our SOI core business, so this ends our opening remarks. We are now ready to answer your questions. Operator, please. I leave it to you.
Thank you. As a reminder, if you'd like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. You will be advised when to ask your question. So again, that's star one on your keypad. We currently have, oh, apologies, we do have a first question, and it comes from the line of Robert Sanders from Deutsche Bank.
Yeah, hi. Good evening, gentlemen. Just on the commentary on 10%-15% growth for fiscal year 2021, I think that implies something like low-30s% growth in fiscal year 2022. So can you just give us a bit more characterization of what is happening beneath the different segments: FD-SOI, RF-SOI? Is the rebound in 2022 driven by FD-SOI coming back and POI, and RF-SOI kind of grows in a linear fashion, or is there something else happening?
Yes, thanks, Rob. I mean, clearly, I mean, it is too early for details on these questions, and I really invite you to come in June. I think it's very important that we give you more color on that in June. But overall, I mean, we have really got FD-SOI a great success in the first wave of adoptions, and we are still continuing to look at broader adoptions. The tailwind is clearly 5G, and we see a lot of accelerations in the 4G/5G transition. So we'll give you more color, but I mean, there is a lot of positive things happening.
Got it, but on the sort of range of one to three million per year that you've talked about FD-SOI, I think one million was related to China and one million was related to maybe TSMC moving into FD-SOI. It sounds like with the GF Chengdu Fab being empty and TSMC not adopting FD-SOI, that you're more leaning towards the one million per year target for your kind of medium-range target for FD-SOI. Is that right?
No, I mean, we cannot really comment on our clients, and clearly, there is a lot of new innovations coming. So I think what we should really look at is the current adoption profiles and the new design wins that we are getting. It will be really visible, I mean, during the course of this year, and clearly, we are not only looking at the opportunity of this 1.4 million wafers that we discussed during the Capital Markets Day, and it will normally continue to improve to the 3 million as we go into the fiscal year 2025, and we are still on the same path.
Got it. And on the POI opportunity, this is, as I understand, related to something called Thin Film SAW. Is that a direct connection to Thin Film SAW POI? And is the fact that Broadcom is now putting its FBAR business for sale a kind of sign that Qualcomm's SAW technology is becoming much more competitive and other companies are more sort of eating into the opportunity that B currently occupies? Is that how you think about your POI opportunity as you're looking forward?
Yeah, again, I mean, no comment on the clients and the names of customers. But for us, I mean, POI is Thin Film SAW filters, and the time that we are really looking at is one million wafers within the next five years. This is really what we are targeting.
Got it. I'll jump back in the queue. Okay. Thanks a lot.
The next question comes from the line of Ken Rumph from Jefferies. Please go ahead. Can you are now unmuted? Please go ahead.
Excuse me. Unmuted. Hi, gentlemen. Ken Rumph. Firstly, thanks for the early guidance. I do appreciate that on FY21. Just looking at how the quarters have developed, we've had constant currency organic growth in the 40s dropping to 11%. It looks like it's going to be back up to 40 odd in the fourth quarter. And then at this stage, and I appreciate early and no doubt cautious 10%-15% next year, could you say a little bit more about what's happened in the third quarter? You talked about industry, sorry, inventory adjustment. Just a little bit more on that to understand what's causing these kind of ripples in the growth rate?
Yeah. First of all, I mean, on our side, I mean, no surprise because we have contracts, and we knew that the profile of this fiscal year was a little bit bumpy. But clearly, I mean, we do not have the same fiscal year than our customers. And as I said in the call, there is clearly some slight year-end inventory management by some clients. And we had also to experience some changes in the product mix. As I said, I mean, really, we have seen a trend in our Asian customers moving rapidly over the last quarter. So everything together, I mean, we did anticipate this, as I said, last quarter during the call because we did manufacture ahead of time some products for this year-end and specifically for Q4 because the Q4 delivery is clearly very, very high.
Okay. Understood.
So our strong Q4 is, I mean, specifically driven by RF and FD as well and driven by Asian customers.
Okay. And one other thing. Does POI begin to make a more significant effect on the fourth quarter, or it's still early days for that? You note the first revenue.
No. It is. We are very proud about this commercial sales because we have been in all the steps, qualifications, and working with many customers. So we got the first basically purchase order, commercial purchase order. So we are very proud of it, but it's not yet significant.
Okay. Thank you.
It will start to be during the course of the year.
Understood. Thanks for that.
The next question comes from the line of Jérôme Ramel from Exane BNP Paribas. Please go ahead.
Yeah. Good afternoon. Quick question, Paul. Could you update us on the capacity plan for Singapore and as well for Bernin site for the POI?
So yeah, on POI, I mean, as we said during the last quarter, we had to expand capacity, and we are expanding capacity. Today, we are ramping the factory, and we will have by this summer 60K capacity available, and on the Singapore, I mean, we continue to expand our capacity in Singapore. You know that in Singapore, we have SOI capability for FD-SOI, for RF-SOI, but we have also in-sourced epitaxy in Singapore as well as refresh, so we continue to see good progress in the qualification process with all customers in Singapore, and really, I mean, this is really pushed by RF, but also new FD customers.
We are still in the process of qualifying, but we continue to make progress also in capacity in Singapore at a lower speed than what we were expecting to do one year ago in terms of the SOI capacity, but we continue to increase capacity.
Okay. Thank you. And maybe one word on silicon photonics. You haven't mentioned what the dynamic there.
So it's interesting because, yes, we didn't mention, and thank you for catching this one. It's a steady growth. Okay. We continue to see photonics really having more and more traction and a lot of evaluations going on from Asian customers as well.
Thank you very much.
Before going to the next question, just as a final reminder, if you'd like to ask a question, press star one on your keypad now. The last question comes from the line of Robert Sanders from Deutsche Bank. Please go ahead.
Yeah. Hi. Just one follow-up was just around product mix. If I remember rightly, FD-SOI has the lowest gross margin of the different 300-millimeter product lines, given that you have to price it quite aggressively relative to bulk, whereas in RF-SOI, you will have very high share, very high pricing power, same with Imager-SOI. So presumably, if FD-SOI is not growing in '21, that will help your mix. So presumably, there should be a tailwind on the mix side before you consider the underloading impact of Singapore. Is that how we should think about the gross margin in FY21?
Yeah. I mean, Rob, we don't comment on the forward-looking in terms of EBITDA margin, but clearly, we continue to invest. We continue to grow our capacity not only in Singapore but in Bernin. So we'll give you more color on that in June next year. Sorry, this year.
Got it. Okay. Thanks a lot.
There are no further questions in the queue, so I'll hand the call back to Mr. Boudre.
Thank you, operator. And thank you for your questions. So I would like to remind you that our Q3 performance was pretty much anticipated and that we have a very solid order book for Q4. We are, therefore, confident enough to reiterate our full year guidance. So the growth is based on the success of our RF products, notably in the context of 4G and 5G, as well as the ongoing adoptions of our digital products platform for AIoT and the automotive market. So this ends this call, but let me just give you our next date in the agenda. So in the Mobile World Congress next month in Barcelona, we will be happy to present a dedicated 5G package to explain the value of our engineered substrate.
In the meantime, let me also highlight that the Embedded World conference in Nuremberg will showcase multiple platforms and products based on FD-SOI. Finally, our Q4 20 sales will be posted on April 22 after the market close. Thank you very much. Again, for the one I didn't see, happy New Year to all of you guys.
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