All right, let's get started. Hello, everyone. I'm Steve Baburek , SVP Strategy and Investor Relations for Soitec. Welcome, welcome to Soitec 2023 Capital Markets Day. Pleasure to have you here in Paris, here with all of us. Thank you for those on the webcast that are also tuned in. Before we begin and present the agenda, let me just show you the disclaimer. Okay. We have a busy afternoon here in Paris ahead of us. We're gonna be together for the next three hours. As usual, we will start first with the CEO vision. We will discuss strategy, innovation. We will then go over the three divisions: Mobile Communications, Automotive and Industrial, Smart Devices.
We will then have our first Q&A session, short break, and then we will resume with a presentation on operations, finance, and then our second Q&A. Busy agenda, let's get started immediately. It's my pleasure to introduce Pierre Barnabé, Chief Executive Officer of Soitec. Pierre?
Thank you, Steve. Thank you very much. Good afternoon to all of you in Paris, good morning and good evening for the one connected online. Thank you, first of all, for attending this Capital Market Day event of Soitec. After more than a year with Soitec, I am glad to be in front of you today. I already had the opportunity to meet with most of you, it is always a pleasure to meet with you again. I would like to thank, first, the top executives of some of our biggest customers for their testimonials. Tom Caulfield, Chief Executive Officer, GlobalFoundries, Jean-Marc Chery, President, Chief Executive Officer, STMicroelectronics, Gibong Jeong, EVP, Business Development at Samsung Foundry. Today is a good day to remind you that we are on track on our fiscal year 2026 roadmap.
It is also a fantastic opportunity for me to share my vision to expand our sustainable value creation towards 2030. Let's get started. Let me start with some important messages. Technology megatrends sustain massive demand for semiconductors and drives the increasing adoption of engineered substrates. Investing in our innovation and our operations allows us to expand our footprint and our leadership in engineered substrates. Finally, we are on track with our fiscal year 2026 objectives. We will double our EBITDA in the coming three years. Beyond fiscal year 2026, we have a strong ambition of sustainable and profitable growth. Let's start with the technology megatrends, which fuel massive demand for semiconductors and higher adoption of engineered substrates.
Over the last 30 years, the semiconductor market has experienced a very solid growth, sustaining the diverse technology revolutions, analog, digital, wide, wireless, across multiple standards and technologies. Today's market is facing challenges. I consider them as opportunities for Soitec. First and foremost, macro volatility. We manage our business and strictly monitor our global context. In a challenging environment, we delivered fiscal year 2023 on our commitment with a 19% revenue growth. This year, we expect to maintain our revenue stable and our EBITDA margin at around 36%. Second, global tensions. We are a global, geography-agnostic company and building critical components for multiple end markets. We navigate the global tensions to balance needs and demands. Finally, environmental challenges. Our range of products are a response to climate change. Our Smart Cut technology makes our products more efficient in terms of energy consumption.
The more Soitec, the more energy efficiency. More than ever, this search for sustainability will be at stake in the context of the tremendous growth expected in the coming seven years. The semiconductor industry will reach $1 trillion by 2030, sustaining a 7% annualized growth. This growth will be fueled by the increasing needs for more applications around artificial intelligence, virtual reality, autonomous and electrical vehicle, 5G computing, or Industry 4.0. More devices, more components, improved form factor, less energy. Soitec is a simple and clear answer for our customers. Soitec products are a critical element in the semiconductor value chain. By design, our engineered substrate are unique products that deliver superior device and system benefits. Over the last three decades, we have developed an expanding toolbox to assemble any types of materials and make them smarter and more efficient.
Such a set of technologies enhances the dies, the chips, the boards, towards more active applications across three markets today: wireless communication, automotive, industrial, smart devices. We leverage our unique expertise to bring tremendous differentiation to the end products and applications. Talking about product portfolio, we are still developing a comprehensive range of silicon-on-insulator pro solutions. For RF and FD, we are an undisputed standard. We have also developed solutions around Power SOI, Imager-SOI, and photonics that is particularly promising. We continue to invest in R&D to strengthen and expand our SOI leadership. On these solid foundations, we have decided to develop specific compounds, products, and for diverse applications. POI for filter products, SmartSiC in the powertrain to enable the electrification of the vehicles, RF gallium nitride, the next frontier for very high frequency applications, and later on, Power GaN for very high voltages.
Beyond these strong assets, we see clearer and further. The use of Smart Cut for GaN will disrupt the market, as well as tiling for InP. We have a strong ambition to expand our leadership and become a standard on new engineered substrate and product materials. Of course, we are going to continue monetizing and valuing our patents and IP portfolio to make our technologies a standard. All in all, we intend to multiply by three our addressable market. We will leverage the three key elements I just described: the doubling of the semiconductor market, the increased adoption of engineered substrates that is the only solution towards technological and environmental challenges, and our ambitious expansion of products and technologies in the coming years. Let's discuss the unique sustainability value creation model we deploy to leverage these powerful megatrends now.
Soitec is a very fast-growing company, outstanding in innovation and excellent in terms of operations. With 4,000 active patents and more than 10% of our revenue invested in R&D, and eight manufacturing units, direct or through partnership, we have the right assets and investment level to foster our ambitions. This is not a fixed and definitive picture if we want to continue developing our wingspan. More than ever, we are contemplating the various possibilities to expand in terms of geographies and know-how. Beyond our excellence in innovation and operations to serve our divisions, our business model will be more than ever reinforced. Better knowing the end user and OEM and understanding their in-depth needs in terms of technical features and sustainability constraints, is one of our secret sauce. This gives us more credibility to engage long-term future-proof conversations with foundries, fabless, and IDMs.
As we engage with fabless at the technology level, we can better anticipate semiconductor architectures. We collaborate to better design and offer the type of engineer substrates they will require to deliver the best performance at the device level. From the historical smartphone value chain we address end-to-end, we have established a clear path towards the automotive sector, industrial world, as well as data center and Smart Devices markets. These are new frontiers for which we are hiring experts to help Soitec in this transformation.
Our operating model stands for a reason. Soitec is able to invent at the edge of the physics and to produce massively in quality and competitiveness. This is the perpetual engine of the group, innovation and operation fueling each other, from lab to pilot lines, all the way to our fabs. It aims at providing the best-in-class products for the divisions: Mobile, Automotive, and Smart Devices.
The division are selling added value, transformation, and innovative features into the entire value chain. Ultimately, this value creation benefits all our stakeholders, employees, shareholders, suppliers, communities, and of course, our planet. To serve the strategy and to execute this powerful model, I am very pleased and proud to work with an incredible team of ambitious, dedicated, seasoned, and diverse leaders. We continue to develop our talents with internal promotions, while we leverage our ability to attract the best in their respective fields. This organization reflects the needs for simplicity, clarity, speed of execution, and transformation, with innovation and operation at the core engine and the division at the business enablers. ESG matters a lot to Soitec, and particularly to me. Regarding sustainability, we are, by design, actively contributing to reduce carbon footprint across the product life cycle.
By cutting 10 times a donor to provide a very thin active layer, we drive energy savings across the semiconductor value chain. Our products are sustainable, our group takes its part. We are reducing our carbon emission by 25% in absolute value between 2020 and 2025. Water consumption is also at the top of the list. We are committed to deploying clear actions to halve the water intakes per unit by 2030. Another very important topic, are people. I met almost every employees at Soitec, and I've been impressed by the expertise, commitment, and share values. This is a company with a fantastic mindset. Soitec is a technology standard, but we also want to become a reference and an inspiring company. We target 40% of women in our top management, always, as well as across the whole group by 2030.
Selectively promoting one employee out of five every year will help us to reach this target. 100% of our employees are getting free shares, which is unique in this industry. We monitor ESG performance across the group. I am the first to be accountable to our ESG objectives and practices. We also monitor our performance at the new ESG committee, at the board level, where around 60% of our directors are independent. Let's talk about key figures now and the concrete illustration of our ambitious plan. After a stable year of fiscal year 2024, due to mark smartphone market decline, compensated by the increasing adoption of FD-SOI and an acceleration on POI, and growing automotive and smart devices segments, we forecast around $2.1 billion revenue in fiscal year 2026.
Our acceleration will be fueled by our POI filters product in mobile, SmartSiC takeoff, the massive adoption of FD-SOI in photonics, and the acceleration and continuous growth of automotive and industrial, as well as smart devices. Three years from now, these two emerging division will weight close to half a billion dollars each. Regarding profitability, we are going to maintain around 36% EBITDA margin, in line with fiscal year 2023, and will build up to around 40% by fiscal year 2026, thanks to added value products and features to sustain strong pricing dynamics, operational excellence and operating leverage, and cost control. We plan to deliver a significant improvement on the EBITDA performance, while continuing to invest more than 10% of our revenue in R&D to prepare our future. This ambitious value creation requires to keep an intense program of CapEx.
In our 300 millimeter capabilities in SOI for expansion and refresh. In our next products generation, POI, silicon carbide, gallium nitride, in 150 and 200 millimeter, also in innovation and sustainability, according to our strong determination to be a standard and a reference in our market. We need to invest. We also continue to optimize our cash management. It give us freedom to be opportunistic for in our expansion strategy. On top of a solid net cash position, our profitable and sustainable growth will continue to feed our free cash flow, lower CapEx on sales ratio, and improve the return on capital employed in the mid-2020s by fiscal year 2026. We see clearer and further, the technological and human potential of the group is very promising.
Beyond fiscal year 2026, leveraging our strong assets and our universal positioning, we intend to continue increasing our market share, developing new strategic partnerships in fast-growing domains, and monetizing our IP toolbox. We will expand our product portfolio, thanks to organic innovation and bolt-on acquisition, to reinforce and expand our leadership. We aim at being a standard and an example to follow in terms of genuine sustainability capacity and at enlarging our global footprint. As I said, beyond fiscal year 2026, we want to expand, and we have the means to expand. It is now my great pleasure to hand over to Steve Babureck, our SVP Strategy. Steve, welcome on stage.
Thank you. Thank you very much, Pierre. Now let's talk about strategy and let's focus on the first part of Pierre presentation and the three engines of growth. You know, in our Capital Markets Day, we love to talk about growth, which is a very important part of our long-term strategy. Soitec equity story is a growth story, sustainable and profitable growth story. This story start with the megatrends. First key message, 5G, AI, energy efficiency, they're not new, of course, we've been talking about them for quite a bit of time, but I think they're becoming more important to all of us. These three megatrends will sustain a massive demand for semiconductor chips.
Megatrends, because behind the term, there are very large ecosystems, with, very large, technology companies, a lot of investments, a lot of innovation in semiconductors, complex supply chains, manufacturing and infrastructure. We also call them megatrends because, they're supposed to change the world. Changing the world takes time, so they're gonna probably be with us for quite a bit of time. This is good news for the semiconductor industry. This is good news for Soitec. More applications will need better semiconductors, and that brings me to the second message: Better semiconductors will also require an increasing number of engineered substrate, the foundation of many semiconductor chips. Third message: What does it mean for Soitec? Engineered substrate is our core business. We are the market leader in silicon and insulators.
We are expanding aggressively in compound semiconductors and into new engineered substrates, new technologies. We will discuss the numbers, but we believe that with the growth coming from the semiconductor sector, the growth from engineered substrate, our capability to innovate and expand our footprint, we should be able to triple our addressable market by 2030. Let's go back to the megatrends, and, you know, clearly, three slides to talk about three giant megatrends, it's gonna be a challenge. We used our human intelligence to select a few key messages that matter to us. Let's start with 5G. 5G is a mobile communications revolution. It is a major upgrade in terms of data speed, in terms of network capacity, latency, reliability, and the ability to deploy a massive number of Internet of Things devices.
To support this important growth in data communications, data traffic between humans, human and machines, 5G is steadily being deployed across the world, across multiple geographies. On the device last year, over 50% of the smartphones were already equipped with 5G. This penetration of 5G within smartphones will continue to raise steadily to 80%, 90% in the next few years. 5G is being deployed, and yet we have not seen yet the full potential of 5G. That should happen more and more in the next few years with a larger impact of 5G. 5G will be more deployed in the networks, of course, in the installed base of smartphones, of smart devices, in various places, universities, schools, hospitals, factories, road infrastructure.
At that point, the number of transformational use cases for 5G is likely to increase significantly. Autonomous driving, remote surgery, augmented and virtual reality, just to name a few examples. On the technology side, 5G has also triggered the development of new advanced semiconductor chips, especially on the connectivity side, on the cellular side. Chips that could bring better performance, better connectivity with lower power consumption, and all of this at a reasonable cost. 5G is only the latest cellular generation, but 6G is already under preparation, and we're already working on 6G with some of our partners. You should expect that new chips, new materials related to 6G will be on the market before the end of this next decade. Second megatrend, AI.
Artificial intelligence, of course, the topic is even more challenging to discuss in one slide. It's a lot of hype, as you know, and it's been on our radar for quite a bit of time at Soitec. There are probably a few important things that are happening with AI right now. First of all, technology. We're probably seeing an inflection point on the technology side due to the exponential increase in computing power. We used to have the Moore's Law to sustain innovation in computing power, and Moore's Law is still here. On top of this, we have a quite significant development in algorithms. AI is getting more powerful, and AI is also being deployed more massively all around us, in the cloud, in the data centers, with thousand and thousand of servers, which we call hyperscale data centers.
AI is also being deployed at the edge, what we call edge AI or edge computing. It means that we now have AI for smartphones, smart devices, various sensors, and also new environments: cars, factories, cities, transportation networks. Back to 5G, AI is able to leverage the massive amount of data that 5G provides through the networks and other devices. Also, going forward, we should expect more use cases for AI to be quite impactful. Think about healthcare diagnostic, product design and development, digital creation, autonomous driving, and so on. Last point about AI, a great impact on semiconductors. When it comes to semiconductors, innovation, AI is a huge market for both infrastructure and devices.
A lot of innovation, whether it's about processing very high-performance chips like microprocessor or graphic processors in the cloud, but also innovation for processing units at the edge, which chips are able to consume very little to non electricity. Innovation in memories to store all the data in the cloud and special memories at the edge. Innovation for optical components, think about image sensors, but also optical transceivers to accelerate data speed in the servers. Last but not least, innovation for power electronics, because data centers consume a lot of electricity, and there's a need for energy-efficient solutions. 5G and AI, they feed each other, kind of overlap. They benefit from the same types of semiconductor innovation. That's, that's the good news, right?
The bad news is that they also amplify a major global issue, which is energy consumption. That brings me to the third megatrend, which is related to energy efficiency. The rising demand of electricity comes from industrial activities, buildings, consumer electronics, and now there are some new drivers for electricity, which is related to the road electrification, electric vehicles, electric infrastructure for the chargers. The current demand for electricity globally does not seem quite sustainable unless we have major upgrade on the grid. Also, we must find more energy-efficient solutions in the telecommunication networks, in industrial facilities, and at the consumer electronic device level. What does it mean for semiconductors? Energy efficiency is also a formidable driver of innovation for semiconductors and also for engineered substrates.
You will hear, we'll talk a lot today about some SOI product, but also silicon carbide, gallium nitride, new engineered substrates to enable energy-efficient solutions. When we think about the electronic solution, we need to think about the entire supply chain, from raw materials, to substrate, to device, all the way to the system when you think about the carbon footprint and the energy equation. 5G, artificial intelligence, energy efficiency, these three megatrends coexist, and they will drive this massive demand of semiconductors and a major semiconductor content increase in multiple verticals and applications. Let's look at a few examples, starting with the smartphones. Smartphone, the content increase started, you know, in the middle of 4G. It has continued in 5G.
It will continue for years to come. We will have smartphones with better 5G connectivity chips, more imaging and sensors, of course, more processing power to compute with all the apps and the connectivity features. Same story is automotive, similar trend. Automotive has several areas of innovation. Autonomous driving and safety, which drives the demand for new components. Connectivity, connectivity within the car, connectivity between the car and the other cars or the road infrastructure or the smart city. Of course, a lot of innovation and content increase related to powertrain as the car is going electric. Third vertical, smart devices. You know, we were gonna talk about wearables, hearables, and other smartwatches, but I'm sure you've seen the latest announcement from Apple, with the Vision Pro.
This is the type of new electronic device that fits the Smart Devices example. New device, it could be a great commercial success. You could see competition coming after. At the end of the day, it's a new electronic device with more connectivity, more sensors, more computing power, more semiconductors overall, and new semiconductors. Going into data centers, this is another area where we must have a significant semiconductor content increase to fulfill all the applications of data centers in terms of AI processing, but also, as mentioned earlier, connectivity also, if you think about Ethernet switches, optical transceivers to increase data speed, and of course, power electronics to optimize the power consumption of the data center. Megatrends will fuel massive demand for semiconductors, new semiconductors, better semiconductors.
The question now is: What does that mean for the engineered substrate, for the materials part of the supply chain? More semiconductors, better semiconductors mean that more and more of these chips will require the use of engineered substrate. Engineered substrate, in a nutshell, at the system level, they bring better performance, lower power consumption, improved integration, and overall, lower cost of ownership. Looking at the status of the market today, if you think about the entire semiconductor industry, the industry today consumes around 240 million substrates a year. 240 million substrates a year. You can see it on the left side of the chart, most of it, 90% of it, is bulk silicon. A small fraction of this global substrate market is what we call engineered substrate. Engineered substrate, SOI, POI, SiC, GaN, and other engineered substrates.
You can see the main difference graphically. A bulk substrate is a simple bulk substrate. An engineered substrate contains a bulk substrate, which could be bulk silicon, and multiple additional layers on top of it, functional layer, additional layer. We specifically designed the engineered substrate for specific applications, specific devices, specific markets. That portion of engineered substrate, which was estimated at around 15 million wafers last year, so around 6% penetration, that 15 million wafers will grow dramatically in the next few years. My colleagues will cover extensively the link between the engineered substrate structure and the benefits at the system level.
For mobile, engineered substrate, the reason why we use engineered substrate today, the reason why we will use more and more engineered substrate tomorrow, is because basically, engineered substrate, if you think about RF SOI, can deliver 5G, can deliver this, better connectivity everywhere. They can deliver longer battery lifetime, so overall, a better user experience. In automotive, engineered substrate can bring the safety, can bring the, autonomous driving, capabilities, think about FD-SOI. Of course, they are a must-go product for, the electrification of the powertrain, of course, with, silicon carbide.
Now, in terms of Smart Devices, as we define it in our division, there's various attributes to engineered substrate, whether it's to enable ultra-low power consumption for edge AI, FD-SOI, or for example, to bring silicon photonics and optical transceivers for data centers. Back to the back to the numbers and what we expect between now and 2030. The total number of wafers is going to grow from 240 million wafers today to 340 million wafers by 2030. This is the overall semiconductor industry, and that's roughly a 7% CAGR, in line with what Pierre was mentioning for the total semiconductor industry, reaching $1 trillion by 2030.
Within that overall global substrate market, engineered substrate is gonna grow from 15 million, roughly, to around 30 million by 2030. The overall engineered substrate market is expected to double by 2030. Within the engineered substrate market, Soitec addressable market, we estimated it at around 5 million wafers last year. We estimate that it should grow up to 15 million wafers by 2030. Our addressable market for Soitec is going to triple by 2030. How are we going to get there? First of all, as I said earlier, Soitec is the number one market player in SOI, which is the largest category of engineered substrate. We must continue to strengthen, consolidate this leadership in SOI. We're number one in revenues.
We have, by far, the largest innovation capabilities, manufacturing capabilities, and strategic relationships within suppliers and customers, and customers' customers, if you go all the way to the fabless, across industry and markets: mobile, automotive, industrial, smart devices. We will continue to expand that leadership in SOI, which is a growing market for the next years to come, and the three divisions will cover this. The second objective is, what we've already outlined in our fiscal 26 objectives, is to continue the expansion into compound semiconductors. In that part of the market, we're leveraging our Smart Cut technology. Think about POI, think about SmartSiC. We're also leveraging our intimacy with the ecosystem.
Most of this growth is organic, but we've also made a couple of bolt-on acquisitions to strengthen our product portfolio or accelerate our development. Think about FrequentiEL for IP, in filters for POI, to support POI, Novasic to accelerate the SmartSiC development, and of course, EpiGan, to enter the epi wafer gallium nitride market a few years ago. Bolt-on M&A is also part of our growth strategy when it comes to expanding our product and technology portfolio. Last, if you think about fiscal 26 and beyond, we will continue to invest in new materials, new substrates, new technologies, across our three end markets, and also to enter new markets.
There's absolutely no limit today when we look at the technology roadmaps for each of the markets to not penetrate them through engineered substrate. Strategic partnerships will also be important. We see more and more vertical integration in the semiconductor supply chain, so we need to have the right partnership, both on the supply side and on the customer side. In terms of end market, as I said, no limit. We have plans, healthcare, memories, quantum computing. We will talk more in the next presentations about where we could go. To wrap this strategy presentation, three key messages. First of all, the technology megatrends, very important to be positioned on markets, end markets that are growing and fueling innovation for semiconductors and engineered substrate.
Number two, engineered substrate will penetrate further the entire substrate market because they bring unique benefits at the system level. Number three, we will triple our addressable market through more innovation, more product development, more strategic partnerships. With that, I would like now to introduce the next topic. The next topic is innovation. Innovation and strategy are good friends at Soitec. We spent a lot of time discussing long-term trends for 2030 and beyond. It is my pleasure to introduce Soitec Chief Technology Officer, Christophe Maléville .
Thank you so much, Steve, for this warm introduction. Hello everyone, and thank you very much for attending our Capital Market Day. Today, I'd like to share with you my vision of innovation at Soitec. Before covering my key messages, let me first bring you back 30 years ago. We were just starting Soitec with one groundbreaking process and one application in target. Coming back today, fast-forward, we've adapted it to multiple semiconducting materials, opening up the field of possibilities to device makers. Innovation is at the heart of our value creation model. It's a key growth enabler. There are three messages I'd like you to remember from my presentation. We leverage material science to deliver value at the system level.
Expanding our technology portfolio is fundamental to bring compelling product to market, and speed is of the essence, and so are our strategic partnerships in the race to intercept market opportunities and gain market share. I've been working on Soitec technologies for over 30 years, from pretty much all possible angles: innovation, product, business, sales. Our funnel has never been so rich. One key learning, innovation is the engine to gain competitive advantage, to have a positive impact on the industry, and to drive changes in the semiconductor world. Going further, we have clear drivers for our innovation. In order to enable technology to high volume manufacturing paths and for a wide range of applications.
At all stage of our product life cycle, our teams must keep in mind our drivers: on-time maturity with enhanced performance, energy efficiency, reduced small form factor, at the right cost and in a sustainable way. How do we proceed, then? First of all, we work closely with the end user to understand their challenges. We take the best out of each single layer of material to address those challenges and combine them into one compelling solution, one engineered substrate. This way, we create unique value at the system level. To make it clearer, let me illustrate with a couple of examples. In facial recognition domain, we've leveraged our know-how in layer transfer to fine-tune layer thicknesses to maximize signal-to-noise ratio and fit with customer design solution, and created a new SOI substrate directly embedded in the end user camera.
Another example, with RF applications, increasing the data rate is key. In other words, we need systems capable of working at higher frequencies with lower losses. To do so, we've replaced bulk silicon and III-V compounds with an innovative combination of layers, allowing for better confinement of electrons and improved RF isolation. That's our RF SOI, a product which is now in 100% of 5G smartphones. Performance is great. Sustainable performance is essential. By design, our products are at the heart of energy efficiency. From the beginning of our innovation process, we minimize energy consumption across the value chain, in our fabs, to manufacture our semiconducting materials, and beyond our fabs, with Soitec customers using higher performance and energy efficiency products. Three numbers to capture our positive impact on the industry. 25% energy saving enabled by the new generation of RF SOI for 4G and 5G smartphones.
10% additional battery range allowed by SmartSiC for electric vehicles, a massive saving on CO2 emission, 40% saving achieved by wearables based on our FD-SOI substrates in standby mode. Let me now show you our DNA base. This table displays our ability to combine different materials to create differentiating substrates. These are all combination we've demonstrated, with on the X-axis, the best active layer, the Y-axis, the range of functional substrate we have used so far. This is a synthetic view of the versatility of our Smart Cut we accumulated along the years, this is a major asset we have in the bank. Behind each of these wafers, there's all process recipes, a solution to adapt materials, know-how and IP to combine all kind of layers.
Having demonstrated all of this allows us to innovate faster, better, and bring unique added value engineered materials to market. Something new in this table, since last we spoke last time, polysilicon carbide. Polysilicon carbide demonstrate we are going one step further. We have a new capability to create new starting substrates, serving our targets. We created a new substrate, driving value at significant cost reduction that is essential to accelerate the transition for electric vehicles. Why we're doing all this? Well, to go beyond silicon. Today, we need more sustainable compounds with higher performance. That's SmartSiC for electric vehicles. Also to bring new materials, crystalline layers, into the silicon world by combining any kind of substrates, such as indium phosphide on anything, pushing the limits for RF, imaging or photonics.
Also to accelerate breaking some systematic limits by scaling up to 300 millimeter. That's tiling indium phosphide for cost-effective usage of InP. To complete this part of our roadmap, what's next? Next is going beyond engineered substrate. In the future, you could imagine Smart Cut to be used as a module directly within the fab. With the ever-increasing number of integrated functions per chip, 3D layer stacking offers the opportunity to do it all on the same handle wafer, yet using the best layer for each function, and that's our core business. In this section, I'd like to give you some elements to show our ever-growing innovation capabilities. Smart Cut is, of course, the pillar of our portfolio, but we completed it with many more decisive capabilities.
Epitaxy of silicon and III-V materials, process layer transfer, materials expertise, surface and interface engineering, wafer reuse, advanced process steps, significantly developed with our acquisition of NOVASiC. Mastering these technologies is essential to create leading engineered substrates. Let me pause for a moment on our Smart Cut process as it embodies the essence of our innovation approach. We have reached a maturity, allowing us a generic approach for generic for engineered substrate creation. We consider a target application, identify the best active material, transfer a thin layer of it onto a functional substrate, and create unique capabilities and greater performance. We open new possibilities, a new dimension for semiconductor material design. Smart Cut enables the combination of material which cannot grow on top of each other.
Smart Cut goes beyond the limitation of the substrate characteristics, pushes the boundaries of any growth or deposition technique, and allow the transfer of the best layer of it for a target application on a functional substrate, and at the end, to create a cutting-edge solution. These two look great on paper. What matters is our ability to use them to bring compelling products to the market. SmartSiC is our latest example. SmartSiC is a new and unrivaled generation of SiC wafers, which leverages the combination of a thin layer of monoSiC and ultra-high conductivity handle of poly-SiC. SmartSiC enables high conductivity substrates and benefits power devices such as diodes and MOSFETs. SmartSiC brings many advantages over bulk SiC. It is greener, faster, and better. Greener, as it saves 40,000 tons of CO2 for each million wafer produced....
Faster by accelerating silicon carbide adoption in 200 millimeter, with more than 10 times mono silicon carbide wafer reusability, and better thanks to the improvement of device resistivity of up to 20%, improvement of yield, and performance in manufacturing. In other words, SmartSiC gathers the best of both worlds by combining the performance of mono silicon carbide and the high conductivity of poly silicon carbide. Every two years at our capital market day, we like to come up with a surprise. This year, let me introduce you SmartGaN. The same way we created SmartSiC to extract the best of silicon carbide material, our ambition is to accelerate benefits of GaN for market. Here, our Smart Cut process allows our customers to completely get rid of the costly and performance-limiting buffer layer. For RF, this directly translate into significant cost savings and smaller form factor.
For power, it allows for a thicker gallium nitride epi stack to be grown on top of the GaN seed layer without risking wafer breakage during cool down. SmartGaN, therefore, opens the door to voltage over 1,200 volt, as required for high power devices. All these developments are only possible thanks to our innovation model. Innovation model, which lies essentially in a smart management of short-term and long-term R&D, strategic partnership, speed, and speed, and of course, our people. Coming back to my first point, we are globally driving a 80/20% baseline. 80% to support our five-year business plan and deliver next generation products. 20% to address the challenges our industry will face beyond these five years, to guarantee Soitec positioning at the forefront and enable our market share expansion. Second key pillar, our strategic collaborations.
They are the engine to better understand the market needs and validate our solutions, accelerate innovation as well as time to market, enable the delivery of high quality prototype in record time, also anticipate tool of record definition as well as recipes. Our SmartSiC pilot line, implemented within the Leti facilities, is a great example of it. The substrate innovation centers gave us access to key players all across the value chain, from leading equipment suppliers to renowned academics and cutting-edge device manufacturers. This hub was a fundamental base for our SmartSiC deployment. Beyond the Leti, our collaboration have no border. Today, we are strengthening our European footprint. We have a rich ecosystem with academics and RTO leaders. We are joining programs at the forefront of the semiconductor industry.
Going forward, we will continue to leverage this partnership and probably expand in Asia and in the U.S. Let me move on to the third pillar of our innovation model, speed. In our industry, speed is of the essence. It defines our ability to intercept opportunities and gain market share. We must run fast, faster than the others, which guarantees success of our business model, leading deployment of new standards with large player. Speed played a pivotal role in our success to deliver SmartSiC in less than four years, including most advanced device, right first time validation. Finally, at the roots of Soitec innovation system are its people. Inventors and experts will sustain our growth ambition beyond fiscal year 2026. They will leverage efficient processes, a strong and expanding innovation toolbox, as well as strategic collaboration all across the semiconductor ecosystem.
This is our model, and its course to gain competitive advantage in always expanding domains. Well, thank you for your attention. Now, I'm very pleased to welcome Jean-Marc, Jean-Marc Le Meil, with whom I shared many Smart Cut adventure. Jean-Marc, the floor is yours.
Thank you, Christophe, for developing a Smart Cut-based technology, supporting our innovative product roadmap. Good morning, good afternoon, all of you. I'm Jean-Marc Le Meil. I'm the head of Mobile Communication Division, I've been working with Soitec for more than 20 years on different management positions, from product engineering to general managers of the RF SOI business units, in close collaborations with all our customers. I'm now consolidating 4 product lines: the Connect RF-SOI, the Connect FD-SOI, the Connect POI for filters, as well as the new Connect RF-GaN. Today, I'm proud to present all the great opportunities ahead of us for the division that I did. Let's turn to our mobile communication business plan for the next three years. Our growth is all about 5G. 5G and its global penetrations, which will drive Soitec Mobile Communication Division growth.
Four drivers will help us size the full potential of Soitec mobile communication division. First, 5G sub-6 GHz, which remains to date our main business driver, with 5G phones growing at a 15% CAGR. Second, the 5G mmWave adoption, which is still growing fast at a 15% CAGR, it's already been adopted in dense areas. We're also increasing our footprint, thanks to the, all the Wi-Fi 6, 6E, and 7 new generations. Last, but not least, 5G and Wi-Fi infrastructure rely on all regions, which continue to deploy it. Soitec Mobile division will grow at a CAGR of about 20%, multiplying its revenue by 1.7, and to reach $1.3 billion by FY 2026. 5G is not only about smartphones. 5G is pervasive, well beyond smartphones.
We have already seen new use case, such as extended reality, smart transportation, and many others. For instance, the new 5G-Advanced, Release 18, will enable the massive adoption of connected objects and of fixed wireless access to the home. 5G is transforming the world of smartphones and beyond. The 4G roadmap was the initial driver for RF-SOI. Looking forward, we are looking to a quantum leap brought by 5G, with 100 times the network capacity, 10 times more speed, response times, and energy saving per data. Today, in 2023, in 5G-Advanced, we are entering the second wave of 5G innovations, which are a game changer. 5G-Advanced will result in a greater quantity of connected objects together with fixed wireless access. Allow me to expand on the 5G x factor. In the current decade, data traffic will be multiplied by 10.
As a consequence, the RF front-end module market will more than triple to EUR 45 billion by 2030. The growth will boost the increased requirement for engineer substrates, especially for device like power amplifier, low noise amplifier, switches, tuners, filters, and to address the new millimeter wave bands with beamformers. One more word on millimeter wave. Millimeter wave is expanding the boundaries of 5G to address the exponential growth of the data traffic. As you can see, for example, on this network capacity trend chart in the U.S., showing the saturation of 5G sub-6 GHz in the coming years. Millimeter wave will provide high data rates and the lowest latency. Today, this particularly fits with crowded areas, with the last mile to home, where fiber hasn't been deployed, but also to a large range of new applications such as AR/VR everywhere, smart factories, and other private network.
Beyond cellular smartphones, the connectivity market is driven by three trends. The next Wi-Fi generation, 6E and 7, will see its market value multiplied by 3 by 2030. The fixed wireless access market will deliver 5G to home, which will be multiplied by 8 by 2030. The last driver is the adoption of 5G-Advanced to enable the proliferation of connected objects everywhere. To address this, we have a comprehensive product portfolio. With Connect RF-SOI, FDSOI, POI for filters, and RF GaN. We bring value to all the figure of merits required by the RF front-end modules as our technology fits 4G, 5G, mmWave, Wi-Fi, and also ultra-wideband. Taking an example of RF-SOI, which is the standard today for 4G, and obviously will remain the standard for 5G and Wi-Fi for different components like switches, low noise amplifiers, and antenna tuners.
Also, FD-SOI adoptions across millimeter wave beamformers is progressing very well. POI, after some delay in qualification, POI wafer is now adopted for 5G bands to integrate multiplexers, and is ramping fast into our installed capacity. Ultimately, the market recognize the value of RF GaN, which offer power amplifier with better power efficiency. A few word about the content growth opportunity, which is our story. The high-end premium smartphones is our strongest market. Today, in 2023, the total opportunity is in the range of 100 sq mm per smartphones. It is again expected to more than double by FY 2026, with 5G growing new, in new bands, like sub-7 GHz and millimeter wave. RF-SOI will remain the standard. POI for filter, which present a very significant opportunity for 5G mid-high bands and low bands.
5G millimeter wave will continue to develop based on either RFSOI or FDSOI for RF front-end IC, providing more integration. On top of this, Wi-Fi 6, 6E, 7, and ultra-wideband will also contribute to much higher content opportunity. Let me now comment on the different roadmaps of our products, starting with RFSOI. There is no 5G without RFSOI. RFSOI is the industry standard. We are developing high-end as well as low-end solutions, especially low-end solutions to feed the upcoming 5G IoT growth with a dedicated product, as you can see on the bottom left chart of this chart. We're also demonstrating the scalability of RFSOI for advanced technology nodes below 40 nanometer to address new millimeter wave applications. FDSOI is already embedded in a few mid-end phones, in particular for millimeter wave, but also for envelope tracker.
FDSOI will deliver up to 10%, 20% longer battery life with indicated PAs that deliver a combination of performance, power, and thermal efficiency benefits. The roadmap will include high-end smartphones by the end of 2024 and demonstrate its scalability potential. Finally, to leverage the transition to higher frequency, like FR2 plus and later 6G, Soitec is working on combining FDSOI with a higher resistivity substrate. Our third product family is Connect POI. It is successfully adopted for mid-high bands. These products solve multiple technical challenge in the transition from 4G to 5G, including increased bandwidth, lower thermal issues, and scalability to 8-inch. For these reasons, we are extending our POI roadmap scale toward lower bands while working with some partners on ultra-high bands. Let me now finish the review of Soitec product roadmap with RF GaN.
Today, gallium silicon carbide is the standard for massive MIMO base stations. In parallel, we are providing GaN on silicon solutions for small cells and CPE. On top, we are developing GaN on silicon for on-set applications, thanks to low-voltage compatibility, extended performance to the new FR2 and FR3 spectrum, but also the 200 millimeter scalability. To conclude, I'd like you to take 3 key messages. First, 5G-Advanced-- 5G smartphone, sorry, penetration and new use case proliferations, thanks to 5G-Advanced and millimeter wave, are the engines of mobile communication division growth. Second, Wi-Fi is a great opportunity for our products to increase our standard coverage. Third, we are deploying a comprehensive product roadmap, offering high value to the RF front-end market, which is the DNA of our continuous success.
Before leaving the floor to my colleague, Emmanuel, let me show you a testimonial from Tom Caulfield, CEO of GlobalFoundries, talking about the golden age of semiconductor.
I'm pleased once again to be part of Soitec's Capital Markets Day. Two years ago, I shared an overview of the strong partnership GF has with Soitec, and I'm happy to say that our partnership and collaboration has continued to grow. We all see the mega trends powering the digitization of our industry and the shift from compute-centric to pervasive computing. These shifts are driving exponential growth, building on previous eras, not replacing them. We are adding functionality and better utility. Silicon content in our devices is increasing and must be more intelligent and secure. We need smart and connected sensors working in unison to sense and act at the surface of the edge. This is the next golden age of semiconductors. It is grounded in IoT and is the first era of computing not driven by Moore's Law scaling.
To compete in this new age, it's all about power, power. It's about the best RF wins, it's about intelligent and secure digital processing. Our FDX platform and roadmap is all about innovation beyond transistor scaling. In partnership with Soitec and others, we are providing leading solutions for automotive, smart mobile devices, and home and industrial IoT. GF's differentiated solutions leverage the different types of SOI technologies from Soitec. Together, Soitec and GF play a vital role in doubling the size of the semiconductor industry in the next eight to 10 years, accelerating the transformation for full digitalization and supporting the decarbonization of the economy. I deeply value our partnership with Soitec and look forward to continued collaboration. Thank you for having me.
Hi, everyone. I am Emmanuel Sabonnadière, VP of Soitec Automotive and Industrial Division. I joined Soitec two years ago. Previously, I was leading CEA-Leti, the research institute of microelectronics in France. Before that, I was VP in various complex positions for Philips Lighting, which become Signify, General Cable, and Schneider Electric, with multiple businesses in automobile, automotive, and industry. Let's discuss the latest performance of my division and share with you what's next to come. Our last year, we delivered strong performance with around 80% growth. We expect to multiply the size of the division by almost a factor of three times by fiscal year 2026. By then, around 50% of the division revenue will be generated by SmartSiC. We built our growth on three key markets drivers. In vehicle connectivity, as car becomes increasingly more digital and more demand for functional safety.
Edge computing for zonal architectures with a higher need for autonomous driving and more robust artificial intelligence. Electrification of the powertrain as the industry is rapidly transforming to electric vehicle. Finally, Industry 4.0 and renewable energy with more automation and efficiency. Looking further into the auto industry, we are leveraging two main trends: the digitalization of the car and its electrification. Digitalizations will drive growth, essentially two levels. One, autonomous driving and artificial intelligence will create a need for 10 times more semiconductor computing power. Second, zonal architecture for better response time will require more FD-SOI. The second trend, electrification. It is accelerating. More than 70 new EV models were presented at the Auto Shanghai last April. That should give you an idea how intense the market is.
In this market, we see the powertrain emerging as a new engine and becoming a cornerstone of competition for IDM and OEMs. From a material perspective, silicon carbide is positioning itself as the new standard. It enables longer mileage, faster charging, and lower system costs. That's why its penetration into the powertrain is increasing and extending into mid-range EVs. GaN power should also have a bright future beyond communication. This should touch both automotive and industry. How does this impact the semiconductor content opportunities? This picture echoes what Jean-Marc just presented. Soitec is a content growth story. In this picture, we show an increase about 4 times in the millimeter square per car between 2021 and 2026, especially in the powertrain and ADAS as the two main drivers. This is significant opportunities for Soitec product.
Now let's dive into our product roadmaps and value creation for our customers. Power SOI is a critical product enabling superior performance towards more electronics into the cars. We leverage strong momentum, especially around two areas. First, every MCU, MPUs is associated with growing numbers of power management integrated circuit, what we call PMICs. Second, the increased needs of functional safety, robustness, noise immunity, and high temperature capability are the Power SOI key attributes to push performance of modern cars. In our roadmap, the transition from 200 millimeters to 300 millimeters is accelerating, driven by the battery management systems. Second product, FD-SOI. FD-SOI is now entering in the automotive industry. Its material properties enable greater computing power while maintaining low energy consumption.
It has been identified as the solution to accelerate the transition out of CMOS technologies toward more advanced and lower nodes, MCU, MPU, such as 28 and 22 nm and beyond in FDSOI. This will deliver increasing radar detections by 50% and reducing carbon footprint by 30%. Let's continue with something that was an opportunity not so long ago and is now a reality, SmartSiC. You know it, and as Christophe named it's a greener, faster, and better solution for EV inverters. It is a disruptive product with the ambition to become an industry standard. Greener by design, SmartSiC reduces carbon emission across the whole product lifecycle. Faster, SmartSiC enable to reduce tension on the supply chain, especially in 200 millimeters.
A year ago, we already demonstrated SmartSiC for 200 millimeters because we know how critical it is next, in this innovation for the next big steps for the IDMs to accelerate the transition in EV. Of course, better on performance, SmartSiC is more conductive, enabling cost reductions at device and systems level. All in all, SmartSiC is a game changer. We are progressing as per plan. Since last December, STMicro started the 18-months qualification of our SmartSiC technology in partnership with our teams in France and their teams in Italy and Sweden. Most probably, you will find SmartSiC inside into cars at the end of the next year. We are not stopping here. SmartSiC advance in the roadmaps, still in R&D, will bring more stability, more repeatability, yield enhancements, and repeatability improvements.
From a material perspective, SmartSiC combine, as Christophe explained, a fine layer of monoSiC with a ultra-high conductivity handler made by poly-SiC. This unique combination allows for more than 10 times reusability of the monoSiC donor, and about eight times better conductivity. How does this strong attribute benefit the device? This is on the right part of the slide. The better conductivity allows up to 20% reduction in the key figure of merit of power electronics, Ron, a, the internal intrinsic resistance of the power. This correspond to a jump of 1 generation of device, which is about three to five years.
Lower Ron also means higher current density, giving device makers the flexibility to choose between a smaller die for the same amps or current, which means more dies per wafer, or a higher current in the same die, which means higher value per device. That's why today, almost all key players are assessing our SmartSiC solution. SmartSiC has become real. We generate our first revenues this last year with SmartSiC. We brought it into the market in a record time. From the first decision to develop SmartSiC in 2018, to the transfer in production in our new fab, Bernin 4, scheduled in September 2023. Along the way, we made significant milestones. We have demonstrated the maturity of the technology, as well as the performance and the product reliability. Soitec is now ready for high volume production.
To conclude, between the rapid growth of SmartSiC, the increasing demand of Power SOI, the growing need of FDSOI, and the gallium nitride products still in R&D, the Automotive and Industrial Division have a bright future. Please let me hand over to Michael for Smart Devices. Before that, it is a great honor for me to share a testimonial from a very important customer of Soitec. May I introduce Jean-Marc Chery, President and Chief Executive Officer of STMicroelectronics.
Hello, everybody. My name is Jean-Marc Chery, I am the President and CEO of STMicroelectronics. Thank you, Pierre, for inviting me today. I am happy to deliver this short video address. Let me start with a quick summary of who ST is and what we do, before moving to an overview of our collaboration with Soitec and how it contributes to ST's business objectives. ST is an integrated device manufacturer with 14 main manufacturing sites and employing more than 50,000 people around the world. We have a strong long-term commitment to sustainability, including our target to be carbon neutral by 2027. We have a strong focus on the automotive and industrial end markets, where ST is a broad run supplier to the world's leading companies, and which represent about 2/3 of our business.
For the application supporting these end markets, we aim to provide our customers with technologies and products that are clear differentiating enablers, and this is where our collaboration with Soitec brings important benefits. Soitec is one of our top-tier wafer suppliers, supporting our business ambition. A long-standing procurement of SOI wafers in various flavors, RF-SOI, Power SOI, FD-SOI, Imager-SOI. These technologies are instrumental to deliver some of the products on which rest our leadership ambition in industrial and automotive, and selective leadership in other areas, such as personal electronics. These are other ongoing technology discussions, evaluation or cooperation at R&D level on other specific technologies, including sometimes with CEA-Leti. I won't go into detail for this short video, but clearly this is a testament to Soitec's state-of-the-art technologies and expertise.
What I can mention in one key area where we are moving forward to support ST's ambitious growth: silicon carbide. ST is evaluating Soitec's SmartSiC technology with the goal to integrate it into its substrate manufacturing process as an enabler for additional volume ramp-up. The target is to qualify SmartSiC on ST's SiC MOSFET technology in mid-2024, with products based on SmartSiC to be available from Q3 2024 onwards. Overall, this will support ST's deployment plans for 200 millimeter silicon carbide substrate manufacturing. We are looking forward to continuing to work with Soitec. Success will continue to happen if we continue to collaborate as we are doing today, with mutual value creation for our respective customers, shareholders, and stakeholders globally. Thank you.
Thank you, Manuel, for the very motivational talk earlier. Hello, my name is Michael Raya, and I'm the head of the Smart Devices Division. I joined Soitec about four years ago as the general manager of what was now formerly known as the FDSOI business unit. Previous to Soitec, I was a Soitec customer as the head of Nokia's 5G RFIC division. What is a smart device? At Soitec, a device is smart if it can intelligently sense its surroundings, compute data under flexible power conditions, and network data efficiently and with ease. Therefore, we look at this segment with four key questions in mind: Why is compute need to be smart? How do we build smart sensing? What is required for smart computation? How we, at Soitec, are prepared to disrupt in this space.
There are three key trends that we are following. The first trend is in AI, and how can we scale the amount of inferences per watt, per dollar? The second is in sensing, how can we scale resolution? Third is on compute. We tend to focus on sensing in terms of providing a need for speed. Most importantly, we refer to devices that can sustainably connect devices between edge and cloud. Our growth is predicated upon three trends: meeting higher speeds and lower power consumption in data center interconnects, meeting the tremendous growth for inferencing in terms of inferences per dollar, per watt, at the extreme edge and for real-time processing, and to meet high-resolution solutions, including event-based image sensing and expansion of voice recognition.
Sensors at the edge are very complicated now, in the sense that they require battery operation, lowest cost per bit, and longevity in the field. The expectations are sometimes more than 10 years, and this is a very challenging combination. In parallel, sensor data processing, such as inferencing, is placing a lot of constraints on communication latency and memory size, because at the edge computing, memory is competing with compute power. By meeting these combined demands, we are bringing to the market a very exciting different set of class of products, including intelligent object detection, true wireless stereo, and flexible video surveillance that can be quickly deployed. We see significant opportunities in image sensing and image and video capture in the future, and our right to win is leveraging examples of compute through IoT sensing and low-leakage memory.
Moore's Law, of course, has powered the age of personal and network computing. Previous challenges were met with scaled performances on-chip architecture, such as parallel processing and multi-core CPUs. That being said, we are entering an age of computing, where off-chip architectures are becoming paramount. Co-packaged optics, otherwise known as CPOs, leverage our smart photonics SOI technology and will replace copper interconnects with silicon photonics interconnects. Increasing speed over distance, while limiting power consumption, is placing greater demands on the optical interface within data centers, and there's a tremendous amount of R&D work that's still needed to establish silicon photonics as a mainstay solution within the data centers. Our right to win is that we have a multi-generational roadmap that addresses both the data center and telecom demands. Today, AI and ML architectures are straddling between the electrical and optical interfaces.
More cost and more power is not an option, and this is why co-packaged optics, or CPOs, are envisioned to absorb many of the CapEx and OpEx challenges, realized by our customers. The industry estimates that CPOs are going to deliver 30% power savings and equate to 40% cost reduction per bit. The massive growth at CPOs will only be aided by Soitec smart photonics technology. Our right to win is that we are an established R&D trusted partner in this space. Soitec is today enabling both the edge and the cloud. Our smart compute addresses an array of products, from interconnecting, from gateway, routers, and even network switch ASICs. We are meeting AI on several different fronts. First, in enabling low latency transfer required to bridge inferencing and offloading.
Second, ultra-low power security IP for battery-powered devices. Third, real-time throughput that bridges the edge and training in the cloud. We see tremendous growth in securing data transfer between edge and the cloud, and we will be leaders in Industry 4.0 for automation and where network meets cloud for telco applications. Our portfolio leverages, as Christophe described earlier, Smart Cut, one of our fundamental pillars at Soitec. Our primary target is meeting energy efficiency with sustainably aware electronics. Our Smart Imager-SOI and Smart photonics SOI addresses the sense and network applications, respectively, and our Smart FD-SOI and Smart PDSOI address our computing endeavors. Our Smart Imager-SOI portfolio aims to address front-side illumination, and we've met the industry with resounding success. Our Gen 2 is planned to continue on this path of success with supporting 3D stacked architectures.
With 3D stacked architectures, we can improve the pixel pitch, which in turn will increase image resolution, lower power, and increase fill factor. We aim to enable between a 4 and 10 times increase in resolution with 3D stacked architectures, and we believe that this will allow us to continue our success in image sensing realm. silicon photonics is going to play a major role, with data center connectivity at the top of the list. Today, we are the leading supplier in both 200 and 300 millimeter foundry supply, and we have a very aggressive roadmap.
Our goals are to improve, first, substrate uniformity by 40%, and by doing so, we will enable higher speeds for data communications in excess of 1.6 Tbps, and higher modulation rates for coherent radio in excess of 64 QAM, as an example, which will be used in advanced 5G architectures. CPOs enable the co-integration of optics in the ASIC in a common package, and we believe that our smart silicon photonics roadmap for uniformity will lower power consumption and will aid in the industry in achieving lower cost, higher volume yields. This is why we believe we are on the right track to enabling quantum computing. I am very pleased to announce that the growth of Smart FD-SOI is now, and it continues to highlight our industry-leading merits, for example, an ultra-low memory leakage.
We have seen repeatedly that ultra-low memory leakage is 10x better than in base or using bulk substrates. This is highly encouraging for systems that use AI, and they're therefore very memory intensive. Our performance on demand can be boosted by over 25% with advanced power management techniques such as body biasing. We continue to innovate with our Smart Cut technologies so that we can target 12 nanometers and beyond, and then even enable other foundries. The future of FDSOI is tremendous for us, and it is a very exciting time. We have been evolving. Smart FDSOI has been significant in the past few years at a compounded growth rate of over 70% when considering this application of smart devices.
Our smart photonics SOI commands over an 80% market share today, servicing 5G networks and also high bandwidth access to compute and storage. Today, we are an enabler. Our smart imager SOI is shipped in over a quarter billion devices per year. On the compute realm, we address MPUs, MCUs, FPGAs, and in architectures such as edge and heterogeneous computing. We are setting ourselves up to become the standard for tomorrow. Smart FD-SOI continues to be developed for our supporting future nodes and future foundry partners. Smart photonics SOI will meet the industry mark of reducing power by 30% and set up Soitec as a leader in the area of quantum computing. Our success, and our success alone, comes with trusted partnerships, and I'm very pleased to introduce Dr. Gibong Jeong, EVP of Business Development from Samsung Foundry.
Samsung Foundry has trusted Soitec and our materials, such as FD-SOI, in bringing an exciting realm of products to market, products that are leverage their best-in-class leadership in memories, therefore, including a very exciting subset of edge computing devices. Thank you.
Hello. Welcome to Soitec Capital Market Day. I am Dr. Gibong Jung, Executive VP of Foundry Business Development at Samsung Electronics. It's a great honor to have this opportunity to share with you some of the key focus areas of Samsung Foundry.
The rise of a new market and application in HPC, automotive, and IoT is driving the growth and shaping the future of semiconductor industry today. These new markets and application demand more energy-efficient computing devices. We believe that possible solutions are novel computing logic technology like GAA, new memory solutions with Wide I/O and low latency, and last but not least, advanced packaging for multi-die integration. We, Samsung Foundry, will offer all as a one-stop service to our customers. In the last couple of decades, our investment to both R&D and production capacities have enabled Samsung Foundry as a leader in mobile computing and new markets and applications. We believe that collaboration is a key to success in this industry, and we are excited to work with Soitec to deliver even greater value to our customers.
With the support of Soitec and its evolving FD-SOI technology, Samsung Foundry has demonstrated greater flexibility to its customers, enabling them to realize market-differentiating products in low-power IoT devices, UWB connectivity, and automotive devices, all using a single platform. I express my gratitude to Soitec for their commitment to Samsung Foundry, and I extend my congratulations to them on their Capital Market Day. Thank you.
Okay. Thank you for your attention. We're now gonna move to the first Q&A for about 20 minutes. For this first Q&A, and I will call back the first batch of speakers on stage. Welcome back. For the first Q&A, so we will take questions from the room. We'll take questions from the webcast and also from the conference call. We would like to focus on business, strategy, innovation. The questions related to finance, operations, governance, which I'm sure you have, will be taken in the second Q&A when we come back after. First set of questions related to strategy, business, innovation.
Hi. Hi. Thank you. Thanks for taking my question. I'm Alexandre Peterc from Solgen. I just have two product questions. The first one will be related to silicon photonics. Can you confirm that you have a very high market share in silicon photonics that is destined to the optical interconnects, so the PAM4 DSPs, for example, that was cited by Marvell in particular recently as being a big driver for growth in AI. If you can confirm that. The second one would be on silicon carbide. If you could explain why you have a particular advantage at 200 millimeter, and also if your process can help with the warping problems that have been encountered by 200 millimeter silicon carbide wafer manufacturers. Thanks.
Okay, so first one for Michael and second one for Manyen. Richard?
If I rephrase the question, is to come make a comment on our roadmap for silicon photonics?
Yeah.
Okay, yeah. Yeah, as alluded, silicon photonics is very exciting for us because we're addressing both datacom and telecom, and you provided a very relevant example for the telecom space. What we need to do is provide a multigenerational roadmap, as was alluded, where we improve substrate uniformity that would allow for even more modulation schemes, and also improved or increased modulation density. This will allow a coherent radio application, such as one that you highlighted, to get into spaces that are currently today at IMDD.
Regarding silicon carbide and 200 millimeters, because that was it's in the heart of your question. Two things. First, the larger the surface is, the better is it for the bonding. That's something we demonstrate now since years. Switching to 200 millimeters is, for us, a kind of gift in our roadmaps. Now, regarding 200 millimeters, you're perfectly right. Growing silicon carbide in 200 millimeters is really difficult because just for the seed as a bulk, it takes more than one year to move from 150 to 200 millimeter as a seed. After that, you have to have the growing process working well.
Our partners and our clients and our friends are working very hard to get this monoSiC in 200 millimeter life. We work with most of them because immediately they want to test how it works with SmartSiC, and it works very well. It's clear that with our new fab of Bernard and Cyril will develop about it, we did it in 200 millimeters as a focus, so it's a bridge one. We can switch from 150 to 200, but the center portion is 200 millimeter. It's sure that now having the leaders who wants to move fast and quick in 200 millimeters and having our ability to multiply by 10, we can see as a kind of solution for them in order to address this huge market.
Yes, I think, SmartSiC will be in a good element for the 200 millimeters development.
Okay. Thank you, Manyen. Next question?
It's Manny Hosseini from Susquehanna International. Just as a follow-up to SiC, there's a lot of investment in CapEx by some of your competitors. If you're in evaluation with prospective customers, how will they adjust procurement from these competitors that are in a very aggressive ramp of increasing capacity? I ask the question because I'm under impression that your technology doesn't require as much of a CapEx. It's a very capital efficient. At the same time, there's a lot of investment going on. How can I reconcile these two? Then as a follow-up, what would it take for you to have additional prospective customers other than STMicro?
It's clear that the ability we have to cut 10 times monoSiC donor, it makes CapEx footprint for, let's say, licensees, customers, and so on, totally different. Plus, the fact that the concentration of components on the top of SmartSiC wafers makes also a big difference. It is a game changer, and there is a note that has been diffused last week, independent note, showing clearly these advantages. This is the reason why we believe that SmartSiC will become step by step standard, where we have STMicroelectronics having selected these solutions. First of all, us to provide but them to use it as a license.
Of course, we are discussing with other big players in the SiC market, big players, for which we expect to get some good news in the coming quarters. This is one of the key drivers for the SmartSiC adoption. Keep in mind also that at the end of the day, the product is making the cars with a better range in terms of let's say, consumptions, battery consumptions, but also the chargers will get less time for charging. These are the two constraints today that makes electrical vehicle less, let's say, spreading out. It will accelerate these adoptions. As you know, we are keeping the path to believe that we're gonna get at minimum 30% of the SiC market by 2030.
With the drivers we just discussed, and you underline, maybe better. We are, I believe, a bit conservative for the moment.
Thank you. Emmanuel Matot from Oddo BHF. Two questions, please. First, regarding geopolitical tensions, would you say that they are an opportunity or a threat for European players such as Soitec? How the FD-SOI ecosystem is notably developing in China? Are you regarding the option to have licensees there for that technology? Second, I understood last April that the downgrade of your sales target for fiscal year 2026 was only related to the negative evolution of the smartphone market. I'm surprised to see that you are less optimistic also for automotive and industrial, and more optimistic for smart devices. What are the reasons for those updates on these two divisions? Thank you.
Okay. On the first question regarding global tensions, as we say, we believe that we have our DNA makes Soitec able to navigate within these global tensions. The fact we are based in France and in Singapore, mainly, but of course, with a lot of offices in many countries, is making us quite agnostic in our, I would like to say, passports. As a matter of fact, we are in contact with a lot of authorities in China, in the U.S., elsewhere, to continue driving our ability to provide engine sub-substrates everywhere in the world.
If, of course, we are monitoring very cautiously the sanctions here and there, but today, looking at our portfolio, we see really our ability to really be, to some extent, neutral, agnostic, and being present everywhere. China, as an example, will become a more and more important countries in terms of revenue for us, as well as the US, because we're gonna accompany also the rebalancing of productions and decision makers in this world. The fact we are benefiting from subsidies in Singapore, subsidies in France, we are part of the IPCEI Chips Act in Europe, might be also a first key assets we're gonna leverage.
For the second part of your question regarding China, FDSOI, and so on, we are not looking for licensing many players today. As you know, on RFSOI, we have 2 licensees. We have licensees for SmartSiC seems to be good enough, maybe we could be opportunistic in this way of getting additional licenses, this is not really what we're gonna pursue. We're gonna be very opportunistic in the way to expand, as I say, geographically speaking. We see big areas in the U.S., in Japan and elsewhere as quite interesting, let's say, targets. We're gonna be very pragmatic. At the end of the day, our innovation are keys. Our technologies and patents are absolutely keys.
This is one of our other secret sauce, and it's where Soitec is undisputed. Perhaps, Christophe, you want to comment on China?
I can just complement from your FD-SOI question is China has a planar technology. They are looking, like everybody, for more performance, less power, reducing the cost and so on. I guess for us, selling FD-SOI substrates, which is an easier path to accelerating this power performance couple, I think is an opportunity for Soitec to sell substrates from France and Singapore. I'm the optimistic guy, so I'm on the opportunity side.
There was another question on, if I remember, on the...
On the updates, yeah.
I'm not sure I understood clearly the question, because if we look at the evolution of our revenue for 2023, fiscal year 2023 to fiscal year 2026, you see a strong increase in automotive and industrial division from 13% of weight in the revenue gonna move up to 20%, fueled by, of course, the SmartSiC, strong development, but also FD-SOI, Power SOI within the cars, and it's also a very important drivers. Smart devices will also take the ride with we discussed about photonics, FD-SOI, and so on. All-in-one, we're gonna move from 67% mobile communication to 60%. It means it's gonna grow. It's gonna continue to grow with, of course, strong takeoff of POI starting now.
Let's say decent growth in the other technologies, especially RF and acceleration in FD-SOI. All-in-one, automotive, industrial, and smart devices, as I said, will weight close to half a billion dollars each. It's another dimension. They're gonna really move into another league. This is what we see, and this is our plan. At the end, we're gonna grow as planned, and not less than what we were expecting initially.
Yeah. I'm Sébastien Sztabowicz, Kepler Chevreux. For Emmanuel, on SmartSiC, ST Micro has been quite bullish on the technology and notably the benefit in terms of cost. Could you help us quantify a little bit the cost benefit for your customers, both on COGS, OpEx, and CapEx, to understand a little bit how you can differentiate from traditional silicon carbide wafers? For Christophe, on SmartGaN, when do you expect to start to ramp your product for this specific technology? What could be the end market that you can address with SmartGaN? Is it onboard chargers, smartphones, base station servers? Do you have any idea of the specific application there? Thank you.
As you know, for SmartSiC, and it's a recurrent question, we'll not communicate on our cost, but we are only communicating on the value created. As it has been mentioned, we are highly beneficial for the OpEx of our customers because they gain a lot by using our technology. Additionally, they gain immediately because the wafer is less resistive, as I explained, and additionally, it's more flatness inside and so on. On the process itself, there are some yield gain, which are obvious. Additionally, there's this big CapEx avoidance for them. Are there overall benefits using SmartSiC? It's obvious that they gain and they gain a lot.
For the SmartGaN, well, 2019, we talk about silicon carbide. 2023, we ramp, 2024, we ramp, so four, five years. I'll try to do as quickly as the previous time. Let's say, four years, four years horizon. In terms of the application, well, the approach is we develop this Smart Cut of GaN, and then we know we can associate with all the different substrates to address horizontal GaN, vertical GaN, RF. You name the applications, like, from the power, which is the onboard charger, lower voltage to a higher voltage. On the RF, there's big opportunities for base stations, for handset.
I will try to make it as versatile as possible to adjust to many of these base substrates and address all the market. I think this is the best we can give to the technology investment we're doing.
Very happy you mentioned SmartGaN again. Very important. It will disrupt the market, you will see.
Maybe I can just elaborate a little bit on the market that we can address with SmartGaN. Today, as you know, I mean, GaN on silicon carbide and GaN on silicon, main market is base station, so massive MIMO. There is no today GaN introduced on smartphones and on sets.
We are working with some partners to develop these solutions, which will be very disruptive, especially with the low voltage compatibility. Moving to SmartGaN, again, it opens the door to more integration. Not only power amplifier, I mean, as Christophe explained, you can transfer the SmartGaN on any type of substrates. We are working with the partners to identify what is the best substrates. It could be SOI, it could be polycrystalline silicon carbide, it could be... Then, I mean, you can imagine, I mean, everything you can do, and not only power amplifier on one die, because the market is asking for more power density, more integration, more shrink, to add more features everywhere in the smartphones. This is where is the marketplace.
One more question here.
Hi, Olivia Honychurch from Jefferies. Back to SmartSiC, sorry. The $210 million of revenue that you forecasted for 2026, can you talk a little bit about your assumptions within that between 6 and 8-inch wafer sales? Maybe give us a little bit of color, and I know you won't be able to be too clear on the cost or ASP differential between the two. I suppose what I'm really asking is there upside to that $210 million if you were to tread more in the 8-inch wafer territory versus 6-inch than you're currently expecting?
The qualification process and what we will start and how we will start our factory in Bernin in September will be in 6 inch. Almost just after that, in less than 6 months after, we'll switch it in 8 inch. As I said, we'll stay bridge, so we can switch from one to the others pretty easily, but massively, we want to move it in 8 inch, because we think this is where the momentum is. After that, it will depend on From our customers. It's true that the reality today is more in 6 inch, but the huge demand we received is in 8 inch. 8 inch, in term of the ratio of the surfaces, you know that is a ratio of 1.81.
There are some massive benefits moving quickly in the 8 inch for the device maker or the car manufacturers. For us, that's also obvious we have more value in 8 than in 6. We will try to play with all of that and to make our success with it.
Thank you, Olivia. There will be one last question, and then we'll move to the next.
Thank you. Jerome Ramel, Exane BNP Paribas. Two question. Could you update us on the FD-SOI roadmap, 28 nanometer node? We don't really hear Samsung at 18 anymore. I think the European Chips Act is talking about down to 10, 12. If you could update us on where we see the roadmap. The second question would be on SmartSiC. Is it fair to assume that for trench, the value of SmartSiC is more on the yield improvement you mentioned, than the reduction of the Ron zone? Thank you.
Probably the quickest answer on the SmartSiC, and I leave you on the FD. No, the benefits will be on both, either for the low resistivity on the wafer itself, as in addition, the yield and the flatness we gain due to the utilization of the polySiC, either in trench and in planar. You've seen in my slides, there were A, B, C, D, anonymized clients inside, and two of them are in trench, so you've noticed that there's a little difference. Honestly speaking, it's not so significant in the overall payback of the SmartSiC for the device maker.
You've correctly highlighted that there was a lot of recent news on investments of the new fab in Crolles, a joint partnership between GlobalFoundries and STMicro. This addresses 18 FD-SOI. We have a very active roadmap internally in Soitec in preparation for advances beyond 18. That includes our advanced Smart Cut 3.0 technology. We expect there to be a very bright future for FD-SOI developments, particularly in the next year.
Thank you. Unfortunately, we're gonna have to stop here this Q&A. We'll go on a break for five short minutes. We will be back for the remaining of the CMD. Thank you very much. Back in five.
... Powerful technology megatrends are changing the face of our world. 5G, electrification, and artificial intelligence promise to revolutionize our daily lives and transform entire industries such as automotive, retail, energy, mobility, health, and education. None of this would be possible without semiconductors. The chips and the cutting-edge substrates they are built on are powering this transformation. At Soitec, we are enabling this revolution and accelerating the transition. We design and manufacture innovative semiconductor materials. Our Smart Cut technology combines different layers of semiconductor materials at an atomic scale, unlocking unique properties tailored to a wide range of applications. Our engineered substrates bring critical advances in device intelligence and result in greater energy efficiency for a more responsible use of resources. Today, our substrates have become the standard for 4G and 5G mobile communications, connecting billions of people around the world.
With this critical positioning comes a clear mission and responsibility: to make our products the cornerstone of a more sustainable future. With a shared passion for innovation, our creative talents and engineers are ready to rise to the challenge. Thanks to our leading technology and patent portfolio, as well as our customers and partners, we are advancing the next generation of products at the heart of sustainable life experiences, electric mobility, AI, edge computing, 6G, and more. We design, we set standards, we innovate, we push boundaries. We are Soitec.
Okay, welcome back. Let's get started. Welcome back to the second part of Soitec 2023 Capital Markets Day. We will now continue the agenda with the presentation on our operation. My pleasure to introduce our COO, Cyril Menon. Welcome, Cyril.
Thank you, Steve. Hi, everyone. I'm Cyril Menon. I'm in charge of operation. I have been with Soitec for 17 years, and it's a real pleasure today to be here for my 4th Soitec CMD. We start with three key messages I want you to take away. First, we are deploying our industrial model, focusing on its scalability and agility. I guide you to help you understand how we can scale production and remain agile. Second, we care very much about flexibility to adjust to our demand. Finally, we are delivering a sustainable growth, caring for talents and resources. In the past six years, we scale up our operation to grow revenue fivefold, from $250 million to $1.2 billion. Meanwhile, we have created a more global, a more sustainable operation organization.
Let me detail what we have built and where we are heading. In the past five years, the two most dynamic, the two most growth driver, were SOI 200 mm and SOI 300 mm. Going forward, we will rely on three major pillars to sustain our growth and to sustain our three divisions. SOI 300 mm, which remains a significant driver, 150 mm POI for the mobile industry, and 150 and 200 mm SiC to supply automotive. In the next year, we'll install additional capacity with the objective to be ready by end of fiscal year 2024, to support the business acceleration expected in fiscal year 2025. Our industrial footprint became global with the addition of our facilities in Singapore.
With the extension currently ongoing, Bernin 4 for SiC and Singapore for SOI 300mm, we are leveraging both our expertise and know-how to achieve scalability, robustness, and agility. I'll come back to this. Today, we rely on a robust workforce of almost 500 employees in Singapore and of around 1,700 employees in our French Alps production site. Maximum SOI capacity of 1.45 million wafer per year in 200 mm SOI, and up to 2.75 million wafer per year for SOI 300mm. We will increase our capacity in both POI and SiC, respectively, up to 700K wafer per year and 500K wafer per year in Bernin. A reminder, both POI and SiC in Bernin 3 and 4 are highly flexible on the 150 mm wafer size and 200 mm.
Last year, we announced groundbreaking to expand Pasir Ris' production site, basically, we broke ground back in December 2022. Remember that no customer qualification is needed for such an extension. This enable us to adapt to business need and easily tune the ramp-up towards high volume manufacturing. The project is on time, we adjusted its development speed to be ready by Q3, calendar 2025, as opposed to Q1, calendar 2025, initially. Let's move on to our new French facility. A year after the Bernin 4 groundbreaking ceremony, the SmartSiC factory and clean room are ready, we are currently installing and qualifying the tool to deliver the first qualification samples anytime soon. Such a performance of erecting in a year a new semiconductor plant is outstanding and has been possible thanks to Soitec, amazing teams, and partner truly dedicated to the success of our company.
Both the 150 and 200 mm pilot line benefit from our engineering experience from the substrate innovation center to achieve high volume manufacturing for this new product. 20% of Bernin 4 will be allocated to refresh 300 mm. In addition, it is fully connected to both Bernin 1 and 2 on the left, and our logistic platform on the right, enabling future synergies. Let me show you how our SmartSiC supply chain is sustainable and agile. First, we have optimized our supply chain with a range of different partners for commercial monoSiC, and we have organized an entirely new ecosystem for poly-SiC wafers. Second, sourcing monocrystalline SiC is a critical path, which our market technology helps overcome. Since 1 monoSiC, we can produce 10 SmartSiC.
In addition, our SmartSiC is saving up to 70% of carbon emission versus conventional SiC. From fiscal year 2022 to fiscal year 2026, we now forecast to invest EUR 1.5 billion in CapEx. 35% of this total CapEx is used to upgrade our SOI capacity. 20% will be spent to expand our 300 mm footprint in Singapore. 10% is used to support our POI factory, Bernin 3. 15% is spent to support the silicon carbide factory, Bernin 4. 10% will be spent for emerging activities such as gallium nitride and innovation projects, and 10% to support ESG project and IT upgrade.
Compared to our last communication, this is an increase of our CapEx budget for fiscal year 2022 to fiscal year 2026 by 6% or EUR 100 million, on the back of an equal impact of foreign exchange, inflation, and ESG project. After this review of the status and forecast of our scalability challenges, let's turn to Soitec operations model. We are organized to manage the entire supply chain from planning to execution, from a large number of suppliers, equipment, substrates, utilities, our operation all the way through to our customers. It relies on central planning, supported by several global services such as IT, quality, engineering, and sourcing, which is ultimately executed by the local operation teams. Addressing such a growth challenge does require ambition. At the same time, we have to keep our fundamentals based on a rational approach and agility.
I'd like you to help you understand better why our model is truly scalable and agile. We are four pillars to achieve this. First, we adapt our supply to customer demand, not too late and not too early. Second, we have the ability to create synergies by sharing resources in the same organization, such as compound semi operation in this slide. Third, we protect margin by leveraging our asset at the earliest stage. For example, we combine new businesses introduction with the immediate benefit from a large 300 mm refresh activity. This enable to lower break-even point of new activities. Our fourth pillar rely on the fab extension to leverage existing footprint and accelerate qualification. This helps to avoid longer time anticipation. In addition, Christophe told you, innovation is part of Soitec DNA, so is the ability to continuously improve and to industrialize our innovation.
Digital twins to shorten facilities lead times through Building Information Modeling or enhance the performance of our asset by reducing energy consumption, for example. AI, to reduce metrology cost. Smart sampling is a good example of such an initiative or improved detection or pattern recognition, and ultimately leading to augmented quality. We also deploy a series of digital tools to continue to improve the team's performance and productivity in SG&A, and especially in purchasing, sales, and accounting. Let me show you now how our standards and methodologies lead to performance. Singapore will be as competitive as Bernin as soon as fiscal year 2025, thanks to a better cost absorption when ramping up refresh NAP. Singapore did ramp 10 times in two years, reaching 150K wafer per quarter in Q4 fiscal year 2023.
Bernin POI did ramp 10 times in 18 months, and we continue to improve the yield of our product, delivering a better margin and delighted our customer with a higher quality. This ability to industrialize innovation, enhance continuously quality, and improve competitiveness is a major asset to continue to secure our market share and to manage an aggressive and profitable growth. After this review of the scalability and agility of our model, let me now dive into our sustainable approach to growth. At Soitec, we care about our people, and focus on attracting talent, growing skills, and enhancing our work environment. We engage in multiple initiative. Here are a few example: We're investing it more in partnership with success, as we proudly earn levels to attract and develop young talent for the industry. As a second example, we offer all employees the possibility to become a shareholder.
Last but not least, we are carefully monitoring the quality of life at work, regularly polling all employee to improve it. As Pierre pointed out today, we are very careful about our environmental impact, constantly increase efforts to reduce water consumption and carbon emission. We have set ambitious objective, such as growing more than two times while reducing our absolute carbon emission by 25%. Deploying a robust management system inspired by ISO 50001, both in France and in Singapore. We are all mobilized to reduce water consumption intensity, significantly improved by 30% in the two last years. We aim to increase circular manufacturing by recycling water and reuse heat loops to further lower energy consumption. Finally, in France, we are using 100% of low carbon energy and securing around 40% of green energy in Singapore.
We work similarly on our extent Scope 3 to the benefit of the entire value chain. First, we are aiming at reducing transportation needs and at reducing carbon by 40% through an optimization of our supply chain organization. Second, we're making sea freight our first transportation choice to reduce emission, as sea freight versus air freight carbon emission is 100 times lower. Third, we are embarking our supplier on our path. We will see the benefit in the next coming year, fulfilling our firm and ambitious commitment to significantly reduce Scope 3 carbon emission intensity by 35% by 2026. Before handing over for finance presentation, let me wrap up my part on operation. Soitec industrial model is scalable and designed to preserve its agility.
Second, I reiterate, we always been wise when we invest in manufacturing, and we care very much about efficiency and flexibility to adjust to our demand. Finally, we care about our people, who are the core of our daily attention to deliver sustainable growth. Thank you very much. Let me introduce Léa, our Chief Financial Officer. Léa, the floor is yours.
Thank you, Cyril, and good afternoon, everyone. Before speaking about our FY 2023 performance, let me share with you three key messages. First message, we expect fiscal year 2024 to be a transition year after a re-acceleration in FY 2025 and in FY 2026. We are currently operating in a complex semiconductor environment. After several quarters during which our challenge was to manage the demand being above our supply capacity, we are now driving our business in a weaker smartphone market with this inventory digestion. We are pleased to see that our diversification strategy is paying off, both for markets and for product. The automotive and smart devices market are offsetting the effect of the temporary weaker smartphone market for FY 2024. Beyond FY 2024, the engineered substrate beyond SOI, such as POI, SmartSiC, are becoming very strong growth drivers.
Second message, to support this strong, sustainable, and profitable growth, we need to continue to invest at the right pace. This is why we expect to invest EUR 1 billion in CapEx between FY 2024 and FY 2026, with a very good return on capital employed, around twice our WACC at the end of FY 2023, up to 25% at the end of FY 2026. Third message, profitability. Our EBITDA will double between FY 2024 and FY 2026 as we accelerate value creation. Let's start with our FY 2023 results. In line with Pierre disclose in his introduction, we are proud to report that we achieved a robust performance in FY 2023 in terms of revenue, profitability, and cash generation. We delivered a record revenue above EUR 1 billion, up 19% at constant exchange rate, in line with our guidance.
Our EBITDA at 36%, slightly higher than last year, in line with our guidance, too. Our net profit increased by 15% year-on-year, and we achieved a strong cash generation while continuing to invest. Finally, we maintain a very strong cash position. This strong performance in the current challenging macro environments illustrate the resilience of our model and our ability to manage our cost base. We released our revenue in April, so no surprise there. We delivered 26% growth. It breaks down between 19% organic growth, driven mainly by volumes increase, and a positive currency impact of 7%. This performance was supported by sustained growth across each of three divisions. Gross profit.
Our gross profit reached EUR 402 million, a 37% margin, slightly up year-on-year, thanks to: a strong operating leverage due to the increase in activity, all our SOI fabs have been fully loaded during the year, a positive product mix, and a strong industrial performance with highly efficient cost control. This is a strong achievement, considering the headwinds we faced. As expected, inflation effect, including the increase in the raw material cost in our long-term supply agreements, the margin dilutive effect of currency impact due to the difference between the spot rate and the hedging rate, and non-recurring effects related to inventory depreciation. Operating income. Operating income reached EUR 267 million, a margin above 24%, improve year-on-year. We continue to significantly invest in innovation, our net R&D expenses increased by 13% year-on-year.
Gross R&D expenses before capitalization increased by EUR 15 million. We invested to strengthen our position in each of three end markets and across multiple product lines in order to maintain our leadership in SOI business, continue POI development for the next generation of products, accelerate on silicon carbide, especially on 200 millimeter, and prepare for further expansion. This translated into hiring new talents and strengthening collaboration with innovation platforms. SG&A on sales are down to 6.5%. The increase in the number of staff and salaries was offset by the decline in share-based compensation. During the year, we adapted our spending plan, and we adjusted our cost structure for FY 2024. At the net income level, we also improved profitability, which reached EUR 233 million, more than 21% margin.
Our financial result is negative at EUR 10 million compared to negative EUR 1 million last year, due to less favorable exchange results. Our income tax continues to benefit from tax loss carry-forwards, and our effective tax rate is at 10%. This is higher than last year because of non-recurring favorable effect in FY 2022. Let's conclude the P&L chapter with the EBITDA. We delivered a record EBITDA at EUR 391 million, a 36% margin, slightly above last year. This is our best EBITDA margin ever. Our EBITDA margin results from higher gross margin, lower SG&A on sales, higher depreciation on sales. This favorable effect has been partially offset by the decrease of share-based payment expenses and non-EBITDA expenses. The strong level of profitability, despite the macroeconomic situation, and especially the effect of inflation, reflects the resilience of our business model.
Moving on, let's take a look at cash flows. We were able to generate a EUR 34 million positive free cash flow while continuing to invest to support our group expansion. This free cash flow is slightly lower than in FY 2022. The EBITDA growth has been offset by the increase in working capital, higher tax paid, and increased investments. We already covered EBITDA. Regarding working capital, the increase on EUR 96 million is mainly explained by the increase in activity and lower than payments received from customer due to the timing of our long-term agreements. We continue to drive our group carefully to monitor the working capital needs. About taxes, we had higher cash outs due to non-recurring favorable effect last year. Regarding cash out from invested activities, we invested EUR 228 million. This amount does not include tools financed through leasing contract.
If we include them, total CapEx cash out would amount to EUR 244 million, slightly below our initial estimate of EUR 260 million, due to the timing of payments. Where did we invest our CapEx? They are mainly related to capacity investment carried out in Singapore for 300 millimeter wafer production, including additional capacity for refresh and epitaxy, and to a lesser extent, in Bernin, for POI wafer production and renewal investments. They also include investments in innovation, including capitalized R&D. All in all, our cash position increased by EUR 60 million to EUR 788 million. Financing flows were positive at EUR 20 million. It includes new loans to finance tools, both in France and in Singapore. Let's move directly to our financial structure.
As you can see, we ended FY 2023 with our strongest balance sheet ever, both on equity and cash side. Equity exceeded EUR 1.3 billion, up EUR 262 million compared to March 2022. Our net cash position remains stable around EUR 140 million. The positive free cash flows generated during the period have been compensated by the increase in financial debt related to new leasing contracts. Let's move to our FY 2024 guidance. FY 2024 will be a transition year. Let me give you more details about the three part of our outlook: revenue, EBITDA, and CapEx. First, revenue. We anticipate FY 2024 revenue to be stable year-on-year at constant exchange rate. However, dynamics among our three divisions will not be the same.
In our mobile division, we expect a strong inventory correction during the first two quarters due to a weaker smartphone market, impacting mostly our RF-SOI business. This will be offset by our two other divisions, for which the increase in revenue will be driven by strong market dynamics. Growing semiconductors in cats with increased electrification and digitalization in an automotive market we assess as solid, and the dynamic around artificial intelligence, both in cloud and edge computing for our smart devices division. Further adoption of FD-SOI products and a rebound in POI product sales will contribute to the FY 2024 revenue and will offset the decrease in RF-SOI product sales. Overall, we have a good level of contract and PO coverage for this fiscal year. We have frequent discussion with our direct end-end customers in order to anticipate as much as possible and to adjust, if needed.
We anticipate our H1 total revenue to decline at constant exchange rate by around 15% year-on-year, with a bottom point during our first quarter, followed by the strong acceleration during the second half of the year. Even if we are used to have a strongest H2, the significant difference in revenue between H1 and H2 will need to be closely monitored. To manage our production, we must find the right balance between optimizing the use of our industrial capacity while managing our inventory, and of course, to further adjust costs, if needed, depending on the timing of the rebound. P&L. We expect to maintain our EBITDA margin around 36%. We anticipate our gross margin to stay overall in the same range than in FY 2023. Will benefit from favorable currency effect.
Our EBITDA estimate is based on the EUR 1.10 dollar rate, while our average rate for FY 2023 was around 1.18. Of course, our strong operational performance will continue to fuel our growth margin. Overall, we expect a good level of loading without any inventory building effect. Our Bernin 2 fab, dedicated to 300 millimeter, will be still fully loaded. As shown by Cyril just before, our cost per wafer in Bernin, in 300 millimeter, will remain flat, while improving in Singapore due to higher volumes in epi and refresh, leading to better cost absorption. We leverage our agile organization to reallocate people from one fab to another in order to optimize our financial performance. On the headwind side, we'll face the effect of inflation, including the raw material costs, based on long-term supply agreements.
We plan to continue to significantly invest in innovation to support growth beyond FY 2024. On the other hand, we will contain SG&A expenses to protect FY 2024 performance, and we have reinforced our cost control process. Finally, CapEx. Cash out from CapEx is expected around EUR 300 million, essentially reflecting capacity investment plan to support the growth beyond FY 2024, in FY 2025, and in FY 2026. Of course, this investment plan will be deployed based on the visibility we will have on business for FY 2025 and FY 2026. Let's move to our financial model. As explained by Pierre, we have several very solid growth drivers, which focus on value-added products, with two main engines of growth: the semiconductor market growth, impacting each of three business, three end markets, and the adoption of new engineering substrate beyond SOI.
The growth between FY 2024 and FY 2026 will be supported by the increase in sales of SOI products, half of this growth coming from volumes and the other part from ASP and mix, as well as the adoption of compound product, POI, SmartSiC, and to a lesser extent, GaN. Our growth, as well as being sustainable, will continue to be more and more profitable, as we are guiding our business to reach a 30% EBITDA margin in FY 2026. From FY 2024 to FY 2026, we'll capitalize on three main profitability drivers. First one, the operating leverage coming from higher activity. Our current SOI and POI fabs will be fully loaded in FY 2026.
Our Bernin 4 fab, mainly dedicated to SmartSiC, will still be in the ramp-up phases, will have the positive effect of the European industrial fundings that will compensate the effect of the under absorption. Our expansion in Singapore will just start. The under absorption will be offset by the performance of the other fabs, given the projected size of our group. We'll continue to improve our industrial performance. Second profitability driver, ASP. Third, positive mix coming from higher value-added products. At the same time, we plan to reinforce our R&D efforts. This financial model is based on a 1.10 euro dollar rate. Remember that a change of $0.05 has a 1 point effect on our EBITDA margin. Overall, our EBITDA in value will double between FY 2024 and FY 2026.
To support this growth, we'll need to continue to invest in capacity expansion. As Cyril presented just before, we only see a slight increase in the amount of CapEx communicated before. Our estimate for the FY 2022-FY 2026 period is now at EUR 1.5 billion, including the buildings, even if our Bernin four building will be financed through leaseback. Over this EUR 1.5 billion, we already deployed 30% in FY 2022 and FY 2023, and we plan to invest around 20% in FY 2024. FY 2024 will be our peak investment year, we are preparing for the future growth in FY 2025 and FY 2026. A key KPI for us to monitor the performance of our business model and our investment choices is a return on capital employed.
In FY 2023, post-tax return on capital employed was at 20%, meaning around twice our WACC. We anticipate a post-tax return on capital employed around 25% in FY 2026. We'll finance our investments with the cash generated by our business. Beyond the strong level of EBITDA we anticipate, we'll continue to strongly monitor our working capital needs. We are driving our business to be at an average rate of working capital on revenue below 30% in FY 2026. We follow closely our inventory level. We try to find the right balance between inventory optimization and production agility. On the financing side, I would like to highlight that we have hedged the variable rate part of our debt.
In terms of capital allocation, we will use our cash to finance our investments, to finance our innovation, and we do not exclude buying back, partially or fully, our convertible bond, OCEANE 2025. Overall, our financial structure is really robust, and we have liquidity tools available if needed, such as credit lines and the possibility of further drawing on our loan. To conclude, we achieved a strong fiscal year 2023. FY 2024 will be a transition year, both from a business and from a monitoring point of view, as we are preparing to re-accelerate for FY 2025 and FY 2026. I will now hand over to Steve to open the second Q&A session. Thank you for your attention.
Thank you so much, Léa. Now let's go to the second Q&A. I'd like to call Pierre and Cyril back on stage for this session. Once again, we will take questions from the audience and from the webcast. Maybe earlier we started short, so maybe we can start here. Any question?
Hello, Sébastien again. On your guidance, because you are still guiding on a flat revenue for this year and flat margins, and we have seen weakening trends on the smartphone market, it seems that maybe you have some boost that was not expected previously, maybe coming from new products ramping up. I'm thinking about maybe POI or FD-SOI. Could you explain a little bit how the adoption of these two technology is moving right now? That would be quite nice. The second question is on the pricing environment. Could you help us understand, maybe Léa, how do you see the prices trending in fiscal year 2024, and what was the price impact in the fiscal year 2023? Thank you.
I'm gonna take, Sébastien, the first question. Under the stability of fiscal year 2024, there are a lot of changes and a lot of dynamics. First of all, H1 to H2, Q1 to Q2. Underneath, if you look at the smartphone business that dropped last year and for which we have the inventory adoption to be done in this semester, we have different dynamics with RF-SOI clearly declining before a rebound. Within these dynamics, keep in mind that the footprints we are getting in the phones is increasing, especially in the high-end phones, first point.
The type of substrates is also expanding RF-SOI, FD-SOI, that is growing very fast, and POI, that is taking off, as we said several times, within the market. Third, I would like to say engines, is a 5G penetrations within the smartphone industry. Under the stability, despite H1 to H2 discrepancies, we have engines within these dynamics that make us confident on the stability of fiscal year 2024, taking into account last element, that as you understood, there are three divisions, and automotive, industrial, as well as smart devices, gonna continue to grow steadily. All-in-one, underneath the stability, lot of changes, but a clear view to see, this revenue around $1.2 billion for fiscal year 2024.
On the other question regarding the pricing, between FY 2022 and FY 2023, we don't see a significant increase in ASP overall, but we have various dynamics. We embedded some increase in ASP in some in some contract, 200 millimeter FDSOI especially, but it will be offset by other contract on the RFSOI part, for which we were at in the last year of the contract. As they are over several years, it was a contract signed much before I will say. between FY 2023 and FY 2024, overall, the effect of the ASP will not be very significant. We'll have some increase in ASP, but offset by the mix.
We cannot say that this is ASP having a significant effect on the gross margin of between FY 2023 and FY 2024.
Okay, maybe another question, Alex?
Yes, yes. Hi, this Alexander Peterc again from Soc Gen. Just to reformulate a little bit the question that Sébastien Sztabowicz just asked, so I'd just like to understand, to what extent do you think that the smartphone market has to normalize in order to get to the H2 growth that you're currently anticipating? A slight corollary is, what is your usual seasonality of H2 versus H1? Over the past two years, I think it was about 30%, so this year's guidance is well over 50%. Is that something that, you know, we should expect as being normal, or is there any risk attached to this forecast? A second point is just for Léa Alzingre.
If you could explain exactly how much of your revenue is hedged and how much is at the spot rate, so we can kind of model that if the FX moves around a little bit? Thank you very much. What is the hedging rate? Yeah, thanks.
On the smartphone business, what we see is the calendar H2 to show a rebound after the inventory absorption, and then a kind of replenishment of the inventories to fulfill the needs. Second part, of course, ready for 2024 calendar. This is what we see, meaning that starting on the H2 of this, our fiscal year, we gotta see starting this rebound, taking into account that Q1 will be the lowest point, then Q2 far better, and then this rebound. Of course, it's it will be not a normal, let's say, discrepancies between H1 and H2.
You're right to say that between H1 and H2, usually we see 30-35% discrepancy. It will be clearly above 50, more in the range of 60% discrepancies. We have the factories ready to absorb that, and gonna mean that we're gonna produce a bit more on H1 to be ready to absorb these additional rebounds to deliver on time what our customers are looking for. With, of course, some mix in products that are gonna be different compared to what we experienced in the past. I was talking about a very strong growth in FD-SOI across all the divisions, and of course, POI, that is taking off very seriously, plus, of course, other products that are also in a very good shape.
Regarding the maybe, before to answer on the hedging rate, just a reminder for everybody. A large part of our revenue is in dollars, around 90%, and half of our cost are in USD. We are hedging our net exposure. Basically, it means that we are that half of our revenue is converted at the spot rate, and the other half at the hedged rate. For FY 2024, we hedge half, we had 40% of our net exposure at a rate around 1.12. It means 20% of our revenue.
Okay. Next question, Mehdi?
Yes, sir, two follow-ups. You talked about the EUR 1.5 billion of CapEx, FY 2022 through 2026, then Steve talked about Soitec TAM expanding by 3 times. Is there any way we could quantify the revenue multiplier due to this investment through 2026? If you're investing EUR 1.5 billion and expanding the TAM by 3 times, should we think about a revenue multiplier that this investment and TAM expansion could bring? I have a follow-up.
I believe what could be interesting for us to stick to the ROCE ratio we described, where we are targeting to be in the mid-20s by fiscal year 2026. That is reflecting this kind of crossovers between the investment we are making, the increased revenues, and the fact that the more we're gonna grow, the less in ratio we're gonna invest, the more we're gonna generate cash. Meaning that, of course, ROCE gonna be gonna be clearly improved, and on the long run, we see also clear improvements.
It's very important to keep a certain level, a minimum level of investment in CapEx, because as you have seen, behind fiscal year 2026, we see a lot of things to be done, a lot of market to be captured, and that's also one of the clear engine, as I said, of Soitec, is to bet on innovation and to invest massively on our operations to really serve what is needed.
Sure. Just a follow-up, there's a $1 billion of incremental revenue.
... 2025. Steve talked about EUR 200 million attributed to silicon carbide. One fourth or one fifth goes to silicon carbide. Is that a conservative assumption? Given all the activity in silicon carbide and previously you talked about how aggressively engaged with prospective customers, how should we think about the conservatism dive into that EUR 100 million or EUR 200 million-ish of incremental revenue?
Well, if we look at our target to get more than 30% of SmartSiC within the SiC market, it gonna drive to more investment in CapEx to sustain this growth for sure. Of course, beyond the Bernin 4 capabilities we just described, we're gonna think on having clear extensions in these capacities. Afterwards, we're gonna look around the options. Take also into account that the revenue in SmartSiC will be mainly driven by wafers we're gonna manufacture, but also some royalties coming from the licenses we got. We expect STMicroelectronics to be extremely successful to bring also good royalties and licensing from their deliveries.
Yeah. Thanks. It's Adam Angelov here from Bank of America. What do you think, you know, what's the feedback you're hearing from customers on silicon carbide in terms of what's holding them back from adoption, or?
If you allow me, I would like Yvon Pastol, our salesman, of course, to give you some flavors on the silicon carbide perception by customers.
Thank you, Pierre. The traction on silicon carbide is very, very good. We have demonstrated at every customer we have engaged, technology works, and again, we are very confident. Today, we have 22 customer engaged with us at several stages between evaluation, qualification of silicon carbide. If we project the way this technology is gonna ramp, it's going to be the fastest ramp in the history of the company. Again, we have a lot of confidence in our ability to bring this technology to market and to ramp it.
Just a quick follow-up. Do you think you could get to the silicon carbide revenue target you have with just the one customer you've already announced?
We will have multiple customer by FY 2026.
Thanks.
Jean-Marie, BNP Paribas Exane. Just a quick question. You said capacity will move from 3 million wafers to 4.5 million. Revenues will move from EUR 1.1 billion to EUR 2.1 billion. The ASP per wafer is increasing by 30%. Is that just the impact of smart SiC wafers? Thank you.
Thank you, Jean, for the question. Basically, obviously, as we explained, I mean, our SOI 200 mm will be kind of, let's say, still ramping, but at very low pace compared to the SOI 300 and SmartSiC and POI. I don't. In term of phase, but in term of mix, for sure, SOI 300, SiC and POI in term of value is much higher compared to this SOI 200. SOI 200, I just want to recall that this represent today 1.45 million wafer out of 3 million, which is 50% of our total capacity and total revenue.
For sure, this one won't grow because we didn't disclose any capacity upgrade on this one, and we will upgrade SOI 300, POI, SiC, and value is much higher compared to SOI 200.
Thank you.
Okay. Jonathan?
I just want to ask about the addressable market, where you're going 3x by 2030 between 20 FY 2022 and FY 2030. Your revenues were EUR 1 billion in FY 2022. Directionally, what should we think about your FY 2030 revenues? Is that 3x, are you guiding to, or should there be any market share gains, ASP increases, mix shifts, which should change that number one way or the other?
Well, as you know, we are not delivering figures beyond the fiscal year 2026. You do your math, I cannot comment.
Question? The direction you're on, it's the right direction.
No, he seems to be a good mathematicians, but I cannot comment more.
Okay. Thank you. Alex?
Hi, thanks. This is Alexander Peterc again, Société Générale. A follow-up on CapEx. We are getting now a little bit more CapEx than we thought before.
I think it'll be a little bit less revenue by fiscal 2026 than before as well. There's a bit of a CapEx creep in terms of CapEx intensity. Could you, in simple words, explain, is this a trend, or are we still going to see a lower CapEx intensity in outer years? Question one. The second one would be more on the Chips Act in Europe. We see STMicro, Infineon getting substantial funds for the new fabs. Are you guys part of any plans to have any CapEx integration from Europe? Thanks.
On your first question, Alex, basically, the $1.5 billion obviously is $100 million higher on the $1.4 billion. Well, most probably, since the target revenue for fiscal 2026 is something like 10% lower compared to the what we announced last year, it's a really valid question. Thank you. Basically, we tried obviously to explain the reason behind and the driver for such a difference. Inflation is one. I say it's one-third of the kind of increase.
The foreign exchange has an impact, obviously, in one direction for the margin, but it has an impact as well from a CapEx, considering that we buy part of it in USD, part of it in yen as well, because the Japanese supplier is pretty high. Let's say, the total addressable market on the different supplies that we get. The third part, which is important as well, is that we believe that we have to reinforce our investment regarding sustainability. Sustainability, in order, for instance, when we move from LPG to electricity, it's better in terms of sustainability, it's better in term of energy consumption because it's much more efficient.
Even in term of, let's say, robustness, we had some concern about the LPG some month ago. We want to be sure that we'll go in that direction. This make our performance more robust. For sure, a bit degraded in term of CapEx intensity. I'm sorry for that. Robustness is important as well to deliver the value as per plan.
Regarding Alex, the Chips Act, there is a very strong ambition by European Union and Commissioner Thierry Breton, I met on Monday, on really bringing Europe back into semiconductor industry. There were communication today where Soitec were quoted as one of the, let's say, contender of the first batch of IPCEI subsidize, and of course, Bernin 4 is one of the, one of the recipient. Of course, it's a beginning, and even if we are not systematically, unfortunately, directly impacted, indirectly, there is an impact very positively for us.
The call, conclusion of the agreement on Monday for EUR 7.5 billion investment is indirectly extremely fruitful for us, because a large part of this factory will drive for FD-SOI-based components. You can imagine that, of course, it's an appeal to us, and we are on the other side of the river. It's really something very important for us. As I said, we are navigating within global tensions. Of course, we're gonna continue also to sell our solutions in the States, in China, everywhere in the world. That's our ambition.
Thank you, Pierre. We're now going to take a question from the conference call. Next question from Sandeep Deshpande, from JP Morgan.
Yeah, hi. Thanks for letting me on. Can you just quickly talk about how you see your OpEx trending in FY 2024, please? I have 1 quick follow-up.
Okay.
Thanks for the question. Regarding the OpEx, on the gross margin side, as I said before, we see a flat gross margin as compared to FY 2024. We will offset the effect of the inflation through our industrial performance. On the R&D side, we'll continue to invest significantly, but on the SG&A side, we will contain the increase due to the cost control measure we already implemented since now, I would say more than six months. Overall, we anticipate the level of OpEx totally under control.
My second question is regarding the pickup that you're seeing in the second half of the year. Can you talk about what your customer orders are at this point in the second half? Because in a response to an earlier question, you said that you expect the market to be better second half of this year, which will mean that your second half of your fiscal year will be better. Are you already seeing those orders coming in for the improved production that you would need to or improved revenue performance that you will see in the second half of the year?
Yes, two, I have two parts in the answer to your question. First of all, most of our revenue, about 85% of it, is coming from long-term agreement with customers, and these have specific boundaries in terms of price, volume, duration, and mix. That's one part of it. If you look at our backlog for FY, I'm sorry. If you look at our backlog for FY 2024, 77% of our revenue is covered already.
Thank you.
Thank you, Sandeep. Yeah, back to Robert.
Can we just come back to the millimeter wave story? You know, it's gone a bit quiet, and, you know, the adoption of the technology hasn't been great. In the U.S., for example, Verizon has lost sort of interest, I think, is fair to say. How much of your business plan is kind of dependent on millimeter wave adoption? What assumption are you assuming within the smartphone market on millimeter wave? Thanks.
Jean-Marc, if you can, answers on the 15% market share of millimeter wave, but beyond, on the also of adoption, so of other functionalities like Wi-Fi 6, Wi-Fi 6, Wi-Fi 7, that are very important to understand the extensions of our footprint within smartphones.
Yeah. So obviously, there is already a first wave of, um, I mean, adoptions of all-dielectric back-end with the millimeter wave , uh, antenna and package. Uh, so you've seen that there are already a few phones, uh, on the market using the, uh, FD-SOI technology. I mean, uh, first of all, thanks to MediaTek, to Samsung. Um, the next wave, um, is expected, uh, for next calendar year, uh, addressing, uh, INS. And, um, and then, I mean, in the future, um, the big question is, uh, is, uh, the Cupertino company, I mean, going to adopt, and which solution they are going to adopt depending on the architecture. And then there is many options that I cannot really comment, um, but, uh, this will, uh, probably, uh, yeah, create, uh, another strong adoptions of, uh, millimeter wave technologies . Then in term of, uh...
I mean, I show a shot in the presentation, showing where the sub-6 GHz will start to saturated, and it will saturate in term of capacity, starting calendar 27, around 27, yeah. Millimeter wave make really sense. Of course, in the meantime, you could see that the C-band was adopted, for example, by Verizon. We still question ourselves, will there be some competition by CY 27, 28 between next wave of millimeter wave and what 3GPP is calling FR3 spectrum, so you know, between 7 GHz and 20 GHz? Where our products already, I mean, fits very well, all of them, RF-SOI, FD-SOI, GaN, so... The question is, what about China?
China, today, we strongly believe that they will also adopt the millimeter wave technology. They will need it, because this is how to bridge a gap with 6G. For so far, 6G, the spec cannot define. 6G, it's about, sub-terahertz. Maybe you have seen in the press that some of our customers already announced some technology ready for millimeter wave using our substrates. For us, it's not a question on how, it's just a question of when. Yeah, I believe it will happen definitely.
Just a quick follow-up on silicon carbide. I was hoping to ask this before, but in terms of SmartSiC, if you just take a very long-term view, there are a lot of people in the industry that think silicon carbide is the kind of next sapphire, that eventually the substrate production will move to China. And commoditize. Are you willing to license SmartSiC today to Chinese substrate vendors? Because obviously, in a commoditization scenario, you'd probably rather get a royalty than build massive capacity in France. Is that something you're willing to do today? Thanks.
As you know, on the SmartSiC, we have already licensed STMicroelectronics. That is clearly becoming a number 1 in the world, okay, in the SiC, including in China. In the automotive industry, you need to be sure that the car manufacturers are getting systematically, at minimum 2 suppliers. We have the 2 suppliers in SmartSiC. It should be good enough. The technology is so advanced and so enabling compared to a classical SiC solutions in terms of CapEx investment, in terms of concentrations of components, R&D spend, in terms of sustainability, that we do believe that SmartSiC will become a standard everywhere, including in China, without having the opportunity to license it. We don't need on the paper an additional licenses.
Yes, Sébastien again from Kepler Cheuvreux. Following up on this question on silicon carbide, we are seeing the Chinese SiC substrates vendor coming to the market with a low-cost substrates, talking about 20-25% discount versus the price of Wolfspeed, for instance. Is this something that could put pressure on the prices of your own substrates?
... SmartSiC substrates going forward, or you are not competing there?
As you can imagine, we need in our supply chain different poly-SiC player and different mono-SiC player, and we sample all of them in term of mono-SiC. Price is important and quality is important as well. So far, we don't see anyone having high quality and kind of competitive cost, even in China. You have some Chinese player with a high quality, but believe me, the cost is not the same as the low-quality player with low quality. This is on 150, and on further extent, on 200 mm, the discrepancy is, I mean, the gap is even higher.
Thank you. Okay, I think
let's...
Okay.
Let's have a quick wrap up.
Thank you. You can go back to your seat. Before saying goodbye and saying thank you to Alexandre Pétaut and the IR team for this great event, I will leave the floor to Pierre for a few closing remarks. Thank you.
Thank you. I will make it short because we are a bit late, but I would like to thank Steve, all the team for the organization of this event. I would like to thank the ExCom team, who did a very good job. The speakers, but also Yvon, Caroline, Emmanuel, Pascal, were there. Of course, all the team were in the atrium, welcoming you in the different workshops. Thank you for them. You see that Soitec is not a sole man company, it's a company of a lot of leaders, a lot of professionals, and very genuine people. That's very important to underline it.
Thank you to you for your attention, and also for the way you have absorbed immense amount of data. I'm sure you're gonna absorb it, and you're gonna get a lot of questions, and we will be more than happy to answer the thousands of questions you will have in the coming days and weeks. It will be my pleasure and the pleasure of the team. Just to in a nutshell, and if we take five key elements to help you to digest and to summarize. The first one is that we have. I believe you have seen it. We have a clear vision and strategy on where we are going and how we're gonna multiply by three our addressable market in the coming seven years.
You see it, you feel it, everywhere across the guys you have seen and you're gonna meet later. Second, we have foundations, strong foundations with our customers. Faithful, grateful customers. This time, I've asked Tom, Jean-Marc, and Siyoung Choi for Samsung Foundry to make a testimonial. In two years from now, we are gonna ask Russell, Cristiano Amon, Gregg Lowe, Jensen Huang, Pat Gelsinger, okay? I know now, to be part of this testimonial, okay? Just showing that we are in a long-term relationship with these guys. You have heard it, and it's extremely important to keep that in mind. The third element is that we have a range of products that are totally amazing, across the lines. You have seen the SOI family, and on top of it, the SmartSiC family to come.
The POI that is taking off, the revolutionary SmartGaN, and more to come. Anything on anything as a kind of focus point of our portfolio of products. The fourth element is that we have an incredible, powerful model, operating model. Innovation fueling operation fueling innovation, inventing at the edge, producing massively. To serve the three division, we have today the three divisions, could be four, five in the coming future, but today focusing on the three divisions to serve our customers. Very powerful model. Very powerful model, very efficient. Fifth point, I have the right team to deliver. I have the right team to deliver fiscal year 2024, fiscal year 2026, and going beyond. At excom level, because now we have a dedicated, simplified organization that are gonna make execution quicker, but in quality. Who is behind?
Have you seen a very solid management team? As I said, Soitec is made of 2,200 talents, really, from the operators to the doctors. We're gonna continue to grow this culture and this mindset. thank you again for your attention, and very excited to discuss with you in the coming days and weeks, all about our future and what we're gonna bring to this market as added value, sustainable added value. Thank you very much.