Thank you, operator, and welcome to Soitec conference call dedicated to the publication of the first quarter sales of our fiscal year 2020. So this is the quarter covering the period from the 1st of April to the end of June 2019. I am Paul Boudre, Soitec CEO. Rémy Pierre, the CFO, and Steve Babureck, the investor relations officer, are together with me for this call. As usual, we will briefly comment on our sales performance, and after that, we will open the call for a Q&A session. So let's start with an overall review of our Q1 sales figures. We posted another robust performance this quarter. We achieved a 30% reported growth compared to the first quarter of last year. This represents a strong organic growth of 20%. In addition, we had a positive currency impact of 4.6% and a scope effect of 5.1%.
This scope effect essentially reflects the acquisition of Dolphin assets in August last year, but also, for a smaller part, the acquisition of EpiGaN, which took place in May. So let me stress right away that this level of growth in Q1 is in line with what we expected when we gave our full year guidance. This means that we confirmed our full year organic growth at around 30%. On a sequential basis, Q1 2020 revenues are down 17% at constant exchange rates at perimeter versus Q4 2019. This is due to usual seasonal effect between Q4 and Q1. Let's now move to our sales performance by revenue type, starting with 200 mm. Compared to Q1 last year, 200 mm sales went up by 12%, excluding currency effect. Growth in 200 mm sales results from higher volumes, but also from a more favorable product mix.
Additional volumes partly came from Bernin, which continues to operate at full capacity with an annual capacity that has been increased from 900,000 wafers to 950,000 wafers in the course of last year. Higher volumes also came from Simgui, our Chinese subcontractor in Shanghai. Simgui's output is now representing more than 15% of the total 200 mm wafers that we sell, and this compares with 10% in Q1 last year. Simgui's output is helping us to meet customer demand, and this is generating, as you know, extra sales. By a type of products, Q1 sales of RF- SOI 200 mm were slightly higher than in Q1 last year and remained at the same level as in Q4 2019. Q1 sales of Power- SOI were higher both on a year-on-year basis and on a sequential basis.
If we now take a look at our 300 mm business, compared to Q1 last year, 300 mm sales have increased by 32%, excluding currency effect. This essentially comes from much higher volumes, but also from a better product mix. By type of products, growth mainly came from RF- SOI 300 mm and, to a lesser extent, from photonics- SOI. So let's start with RF- SOI 300 mm. Compared to Q1 last year, sales have increased more than twofold. On a sequential basis, sales of RF- SOI 300 mm have doubled compared to Q4 2019. This means that the adoptions of our RF 300 mm products by several tier one fabless and foundries continued at a very strong pace. As you know, RF- SOI 300 mm products are complementary with RF 200 mm products, as they address the needs for more advanced RF devices.
Regarding FD-SOI, I remind you that we benefited in Q4 2019 from significant delivery to one of our key customers. So despite this well-anticipated momentary seasonal decline in Q1, FD-SOI business remains strong. The adoptions of our FD-SOI technology are still growing and continue to be supported by multiple foundries. We have, every quarter, new evidence of the FD-SOI success. And let me give you a couple of recent noticeable examples. Microsoft Azure Sphere security system will be brought to NXP Intelligent Edge Processor, which is built on FD-SOI. Arm has recently presented the first certified PSA IoT devices. PSA means Platform Security Architecture. So this is basically a secure IoT device, which is built on FD-SOI with eMRAM, i.e., with embedded memory.
So to complete the review of our 300 mm products, Q1 sales on Photonics-SOI were significantly higher than in Q1 2019. They continue to be driven by the demand for increasing data transmissions, speed, and cost-effective optical transmissions for data centers and 5G networks. On the other hand, sales of Imager-SOI were pretty low this quarter, confirming the high volatility from one quarter to another that we have already been experiencing in this segment in the past. But we continue to see a good prospect for 3D imaging in consumer mobile devices. Finally, our legacy PD-SOI market sales were slightly lower than in Q1 2019.
Regarding the utilization rate of our Bernin II 300 mm production facility, Bernin II has been operating at an average of 80% of its capacity this quarter, which is virtually the same level as in Q4 2019, and much higher than in Q1 2019, which stood at 55%. This strong level of production is explained by the high visibility that we have on our order book for the rest of the year. We'll get closer to full capacity in the months to come, so in addition, I remind you that Singapore facility is being qualified for multiple products and clients, and that we will gradually add capacity there based on customer commitments, so compared to Q1 last year, we had a further shift in the breakdown of our wafer sales between 200 and 300 mm.
300 mm wafer sales raised from 44%-48% of total wafer sales, and consequently, 200 mm wafer sales went down from 56%-52%. Let's now move to royalties and other revenues. This segment has grown from EUR 1.7 million in Q1 2019 to EUR 6.1 million in Q1 2020. On the one hand, we benefited from the first consolidation of Dolphin Design and EpiGaN. On the other hand, revenues are down 17% at constant exchange rates and perimeter. This is essentially due to a decline in royalties and IP revenues, reflecting the fact that last year, these revenues were including the service contract provided to Simgui. So in summary, we had another strong performance in Q1 2020. This is mostly due to the sustained success of both our RF-SOI 200 mm and 300 mm products that are increasingly meeting the needs of the latest generations of smartphones.
This is also supported by strong performance in Power-SOI and Photonics-SOI. In the meantime, we continue to enjoy a good momentum in the adoptions of our FD-SOI technology, with ongoing strong commitments from our key customers and new achievements every quarter. On the basis of this good quarter, we confirm our guidance for fiscal year 2020. As already stated, we are extremely confident in the fact that we should achieve around 30% organic sales growth in fiscal year 2020, and we continue to anticipate fiscal year 2020 adjusted EBITDA number and margin guidance at around 30%. Before moving to the Q&A session, I wanted to share a few more things with you. Q1 has been another productive quarter for Soitec. We acquired EpiGaN, which gives us the opportunity to further diversify our engineered substrates portfolio by expanding it into new materials beyond silicon and insulator.
We signed multiple long-term supply agreements with GlobalF oundries, extending our close relationship with them to ensure high-volume 300 mm manufacturing for the years to come. Finally, we expanded our R&D collaborations with the Japanese firm Kokusai to bring their expertise in designing and manufacturing processing equipment for thermal treatment and epitaxy solutions at the heart of the new Substrate Innovation Center. So this ends our opening remarks. We are now ready to answer your questions.
Absolutely. So if you'd like to ask a question, please press star one on your telephone keypad. Ensure that your line remains unmuted locally, and I'll then prompt you when to ask a question. And that was star one. So we already have one question coming through from the line of Lira Lee from Jefferies International. Please go ahead.
Hi guys. This is Lira from Jefferies. I just have one question. Could you please comment on the capacity development of the competitors, and maybe have you seen any macro headwinds in this area? Thank you.
Yeah, so the competitions we are talking about here is a competition with SOI. You mean our licensee, right?
Yeah.
Okay. So I mean, clearly, our licensee, we continue—I mean, they continue to enjoy growth on both for SEH for Shin-Etsu Handotai growth in 200 mm and 300 mm as well. I mean, clearly, last year was a growth in 200 mm for both GlobalWafers and SEH. Soitec market share continues to be pretty high. I mean, we continue to manage around 70% market share regarding the overall SOI market.
Right. Got it. Thank you.
Okay. So we have two more questions in the queue. The next one comes from the line of Jérôme Ramel from Exane BNP Paribas. Please go ahead.
Yeah. Good evening, Paul. Could you update us a little bit on where is the capacity for Singapore, and how do you see the mix in Singapore between FD-SOI, RF-SOI, 300 millimeter? Thank you.
The installed capacity in Singapore is in the range of 80,000 wafers, and we are basically now under the final process for end customers' qualifications. We are using the SOI capacity as soon as we can, and we are obviously starting so-called risk manufacturing as we wait for final qualifications on some products. We are now starting to exercise the lines. As you know, the Singapore factory has also the epitaxy capacity in 300 mm for RF, and we are using this capacity that has been now fully qualified with our 200 mm factory in France. We do a mix and match here. The latest is obviously on RF, where we use 100% of the installed capacity that we have in Singapore to support the full activity in France and in Singapore.
So as we continue to see the year, we will continue to basically add capacity in Singapore potentially towards the end of the year if we confirm all the commitment that we have today in the pipe.
Thank you.
The next question comes from the line of Emmanuel Matot from Oddo. Please go ahead.
Good evening. Three questions for me, please, Paul. First, do you see some inventory issues of SOI wafers for some of your customers? Second, when do you expect Bernin III to start volume production of POI wafers, I mean, Piezo and Insulator? Is it still expected for this year? And do you expect some seasonality in your EBITDA margin between H1 and H2? Thank you.
Okay. Thanks for the question. So I'll take the first two, and Rémy, you take the last one. So on the inventory, I mean, we don't see, as of right now, any inventory in the product we are shipping. I mean, it's clearly still high demand, and we are on a tight delivery. So we still continue to see pressure across products. Bernin III, as discussed, I mean, I do confirm that Bernin III will start manufacturing towards the end of this year. Hopefully, we will confirm major announcements soon, but we are preparing ourselves for ramping manufacturing on POI, Piezoelectric-on-Insulator, towards the end of the year. And seasonality, maybe that's yours.
Seasonality, Emmanuel. No, we don't foresee any big move in EBITDA margin between H1 and H2. So our guidance for the full year could be, let's say, equal on both semesters.
Okay. That's very helpful. Thank you very much.
Thank you. Thank you.
Okay. So we have one more question in the queue. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. And the next question comes from the line of Robert Sanders from Deutsche Bank. Please go ahead.
Yeah. Hi. Good evening. I have a few questions, actually. I hope you don't mind. The first one is just on your annual report. I noticed that Samsung is not a top five customer yet. That was a bit of a surprise to me. I'd love any clarity on how that ties off with some of their bullishness on FD-SOI. And the second question would just be, how should I model the ASP of a POI six-inch wafer were you to be majorly successful in the SAW filter market? That would be my second question. And then the third question would just be, given that you've delayed your original planned Singapore ramp in favor of a brownfield expansion in Bernin II for 300 mm SOI, when do you think Singapore can actually be accretive to your cost structure rather than dilutive?
Because clearly, you can benefit from lower labor costs, but there is a flip side around R&D subsidies, etc. But I would expect, in general, Singapore to be a way for you to drive costs down, but only if you can get to efficient scale. So I'd love to get an idea of when Singapore can actually start to be accretive to your overall cost structure. Thank you.
Thanks. But for all the questions, and maybe I can start with the last one to start with. I mean, there is here a misunderstanding. I mean, we are going to ramp Singapore first. This is very clear. And we will continue to add equipment in Singapore up to this one million wafers per year that we are targeting. What we have announced during the Capital Market Day is that as we continue to ramp Singapore, we will plan and expand first the building in Bernin II in order to be ready when Singapore will be totally full, that we can have the capacity to expand and the readiness in the clean room to expand Bernin II. So we are in line. I mean, we are following exactly what you said. We are going to fill Singapore first and continue to ramp Singapore aggressively to support the demand.
And as Singapore ramps, we will prepare Bernin II in order to be ready on time. But as you know, building is quite inexpensive in terms of what is expensive is when you start to expand your clean room and put the system in. This we will not do it very soon. On the Samsung, not in the top five. Clearly, I mean, Samsung is running one product basically, and this is FD-SOI as the foundry. And we have multiple companies with multiple products that have a much bigger impact on our revenue. Okay. So this is very, very, very important that you understand. I mean, Samsung is really focused on FD-SOI alone. So no comparison here. On the POI, what is the question again? Sorry.
Would be a great success, yes.
If it's going to be a great success, I mean, we expect to see a huge success, clearly, based on the feedback we have. And it's bringing a huge value at the system level, as we explained during the Capital Market Day. And clearly, this product is going to be with a very good ASP also for us. I mean, it brings performance, it brings stability in temperature, also allows a smaller size at the device level. And you can integrate also multiple filters together. So all these benefits are key for 5G, and this is clearly the opportunity that we are going to bring to the customer. So we expect a huge success in this.
Yeah. No, actually, that wasn't my question. My question, that's great information. Just what should we model on the ASP for the six-inch wafer for POI was my question.
Clearly, this is not something we chose, right? I mean, you understand the target we have overall as a company, and clearly, it's a new product. So, you can expect that we are at least at the minimum that we are targeting, but it's going to be more than just what we expect here. It's going to be a good success, and I guess.
Got it. Thanks. I'll drop out of the queue. Thank you.
Okay. So, we do not have any more questions. So as a final reminder, if you'd like to ask a question, please press star one. So, we have received one question from the line of Trion Reid from Berenberg. Please go ahead.
Hi, yes, guys. Evening, Trion here. Just one question on the way in which you see your sales growth panning out throughout the year. Because obviously, I noticed that you say that you expected the 20% organic growth when you gave your 30% guidance. But if you look at the second quarter, I accept also that the comparison base eases. But in the second half of the year, you will have a much more demanding comparison base. So, is it that we should expect a considerable acceleration in growth in the second half of the year, maybe driven by the POI, or is there something I'm missing in terms of the evolution from the 20% year-on-year growth we've seen in Q1? Maybe you could help me with that.
So those are good questions. So first of all, yeah, don't spend too much time in reading quarter by quarter because, as you know, there is some reshuffle between quarters, and this is always happening like this. And again, this Q1 is a seasonal effect that we were planning for. So there are two things that I can say that we are confirming our full-year guidance. And back to H1, I mean, we will be back to this around 30% on H1. That's for sure. So we see that this is the way the year is going.
Okay. Thank you.
Okay. So, we do not have any more questions in the queue. Oh, we have just received one question from the line of Robert Sanders from Deutsche Bank. Please go ahead.
Yeah. Sorry. Just to follow up on the year and the way it's going to pan out. How should we think about the 300 mm volume in terms of ranking of relative size? I mean, is it sort of RF-SOI, then FD-SOI, then Imager-SOI, then Photonics-SOI, then PD-SOI? Is that how we should think about the ranking in relative size? And I have one other minor follow-up. Thank you.
Yeah. What is true is that 300 mm is going to affect 200 mm. That's for sure, and we expect that coming this quarter, basically next quarter, but back to your one, two, three, that could be right. What you are saying could be right. RF and FD in 300 millimeter will be the biggest in any case.
Got it. And then just.
Quarter to quarter, it's very difficult to really say. They are ramping in a very aggressive way.
Okay. And just on Photonics, we haven't really talked about that for a while, but there's been probably more announcements on Photonics in the last six months than in the last three years in terms of activity. What % of Photonics wafers are actually on SOI today? Is it close to 100% that you're seeing? Because presumably, at some point, this stuff will ramp in a big way. And I get the feeling like SOI is the kind of standard for what people are working on. But how would you estimate your sort of penetration in those development projects right now? Thank you.
Rob, this is exactly what we explained during the Capital Market Day. And I'm sorry because I know that you couldn't make it, but Silicon Photonics transceiver, all 100 gigabytes per second, it's 100% market share on Silicon Photonics. So yes, we are taking here a position that is going - I mean, this material is the standard and will continue to be the standard for this application. So, we feel comfortable. I mean, the market will grow at the speed of the market. That's for sure. And that's the hope this helps.
Okay, but no, we see more.
We see more also potential opportunities going into 5G for these applications. But this is still the beginning.
So there's no big inflection at Intel or anyone in the next 18 months? It's just slow burn for now and then maybe an inflection later on kind of thing?
No comment on this one. I cannot comment.
Okay. Okay. Thank you.
Thank you.
Okay. We do not have any more questions. I'll hand back over to your hosts.
So, thank you, Operator. If there is any more questions, maybe I can go to the conclusions. Again, thank you for all your questions. I think it's in order to conclude this call. I mean, I just would like to recall that we posted another strong performance in Q1. And we are in line with our guidance for fiscal year 2020. The upcoming agenda, basically, so the AGM will take place on the 26th of July at our headquarters here in Bernin. And we will publish our Q2 2020 sales figures on the 15th of October after market close. Again, I would like to thank you all for your time. And I hope to see you very soon somewhere around the world. Bye-bye.
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