Hello, and welcome to the X-FAB third quarter 2025 results conference call. My name is George. I'll be your coordinator for today's event. Please note this conference is being recorded, and for the duration of the call, your lines will be in a listen-only mode. However, you will have the opportunity to ask questions towards the end of the presentation, and this can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I'd like to hand the call over to your host, Mr. Rudi De Winter, CEO, to begin today's conference. Please go ahead, sir.
Thank you. Welcome, everyone. In the conference call today, we also have Alba Morganti, CFO. In the third quarter of 2025, we recorded revenues of $229 million, up 11% year-on-year and 6% quarter-on-quarter, which is well above the guidance of $215 million- $225 million. We also progressed well in our core markets, automotive, industrial, and medical, with a revenue of $216 million, up 14% year-on-year and 5% quarter-on-quarter. Our core business now represents a share of 94% of the total revenue. Now, breaking it down by end markets, in the third quarter, the automotive revenue was $147 million, up 1% year-on-year and 2% quarter-on-quarter. The third quarter industrial revenue was $48 million, up 51% year-on-year and 1% sequentially, reflecting the overall recovery of our industrial end market. The gradual recovery of the silicon carbide business contributed to this positive evolution.
Now, for the medical business, the revenue in the third quarter hit a record high of $21 million, up 74% year-on-year and 40% quarter-on-quarter. The growth was mainly driven by contactless temperature sensor , DNA sequencing, and echography applications that altogether did very well in the past quarter. Now, looking at it by technology, in the third quarter, the CMOS revenue recorded a growth of 10% year-on-year and 4% quarter-on-quarter, mainly due to the extra capacity that came online for the 180 nm BCD-on-SOI, and the 350 nm CMOS node demand was weaker. Microsystems revenue was up 27% year-on-year and 9% sequentially. This is based on a broad set of customer-specific microsystem technologies that we co-created with our customers. Also, demand for new developments in the microsystems remains strong, and this is an area where we will continue to see above-average growth.
Our silicon carbide business continued to recover, and the revenue grew strongly by 30% year-on-year and 21% quarter-on-quarter. The number of SiC wafers produced in the third quarter more than doubled compared to a year ago. The revenue did not follow the same way due to the product mix, and also, the ratio of consigned substrates was much, much higher past quarter than a year ago. The positive trend in the evolution of our silicon carbide business is underpinned by increasing bookings attributed to sustained demand from data centers, electric vehicles, and renewable energy applications. We also see good traction on our new technology platforms that we released at the end of 2024. Many customers are developing their new generation products based on this platform that will give improved performance and lower system cost. The fact that we offer full supply chain for silicon carbide in the U.S.
is well perceived by our U.S. customers that are designing in products for high-value-added assets such as data centers, industrial equipment, and electric energy systems. Quarterly prototyping for the past quarter was $20 million, down 16% year-on-year and 6% down quarter-on-quarter. The order intake for the third quarter amounted to $163 million, down 25% year-on-year and down 21% compared to the previous quarter. The booking in the industrial segment was good. The weakness is primarily due to inventory corrections by automotive customers as well as broader macroeconomic uncertainties resulting from geopolitical tensions and trade disputes. These factors have led to more cautious ordering patterns, while customers also take advantage of shorter cycle times, placing orders later than usual and with reduced lead time. As a result, visibility is still restricted.
The backlog for the third quarter came in at $347 million compared to $413 million at the end of the previous quarter. Let's now move to the operations update. In September, we had the inauguration of the new clean room in Malaysia, which will increase the site's manufacturing capacity from 30,000- 40,000 wafer starts per month. Production at the new facility is being scaled up progressively, with the full increase in capacity anticipated by the fourth quarter of 2026. The expansion will effectively double our capacity for the popular 180 nm BCD-on-SOI technology, which is particularly suited for applications such as smart motor drivers, various drivers such as Piezo Actuators, LED drivers, and Battery Management Systems. The recovery of the silicon carbide business is supported by the existing capacity at our Texas facility. The current installed capacity will enable us to do more than double the wafer starts.
The capital expenditure for the third quarter was $23 million, bringing total year-to-date CapEx to $179 million, and the full-year capital expenditure is projected to be less than $250 million. Let me now pass the word to Alba for the financials.
Thank you, Rudi. Good evening, ladies and gentlemen. We will now go through the financial update. I would like to start this section by highlighting that the third quarter, we succeeded in increasing our sales by 6% quarter-on-quarter, which were the highest since almost two years, totalizing $228.6 million, and which is well above the guided $215 million- $225 million. Our EBITDA grew by 4% quarter-on-quarter and 7% year-on-year, being the highest this year. Our EBIT was almost $24 million, down 5% year-on-year, but increasing by 10% if we compare it to Q3 last year. Third quarter EBITDA was almost $54 million, with an EBITDA margin of 23.6%. If we exclude the impact from revenues recognized over time, the EBITDA margin would have been 24.2%, within the guided range of 22.5% to 25.5%. Our profitability remains unaffected by exchange rate fluctuations as we continue to be naturally hedged.
At a constant U.S. dollar/euro exchange rate of 1.10, as experienced in the previous year's quarter, the EBITDA margin would have been unchanged at 23.6%. In the third quarter, we reported a financial result of - $5.6 million, mainly due to interest results of $4.3 million. Unrealized foreign exchange losses arising from the reevaluation of the euro-denominated debts amounted to $800,000 , but of course, it's a non-cash item. Cash and cash equivalents at the end of the third quarter amounted to $174.2 million, which means an increase of $16.5 million compared to the previous quarter, while net debt decreased by $21.1 million quarter-on-quarter. Despite the peak of CapEx expenditures payments in the first half of 2025, our financial situation remains solid.
As anticipated and now visible, our CapEx are now significantly decreasing, which translates into an improvement of our net debt position, which trend is inversely for the first time since a while. Especially in the current context of uncertainties and geopolitical tensions, it's important to keep our financials strong. To conclude this financial section, I would like to share our next quarter's guidance. Our revenue is expected to come in within the range of $215 million- $225 million, with an EBITDA margin in the range of 22.5% and 25.5%. This corresponds to a full-year revenue in the range of $863 million- $873 million for the full year 2025. This guidance is based on an average exchange rate of 1.17 U.S. dollars to euro and does not take into account the impact of the IFRS 15. Now, I would like to give the word back to Rudi.
Thank you, Alba. I'm glad about the solid increase in revenue for the third consecutive quarter amid a challenging macroeconomic environment. There is significant interest in our specialty technologies. Our silicon carbide business has made measurable progress with growing design activity on our latest silicon carbide technology platform. Additionally, our microsystems division continues to advance with collaborative co-creation projects, enhancing our growth pipeline. While visibility continues to be limited, I'm confident in X-FAB's position that supports sustained long-term business success. Beside the third quarter results, I announced today that I will be passing on the CEO role to Damien Macq, today COO, on the 6th of February 2026 , after the full year results call. Damien is very well prepared, and the board of directors and myself have full trust he is the right person to lead X-FAB. I will make sure there is a smooth transition. I will be supporting him in my role as a member of the board. Of course, for the further future. Operator, we are now ready for taking questions.
Thank you very much, Mr. De Winter. Ladies and gentlemen, as a reminder, if you have any questions, please press star one on your telephone keypad and just make sure that your line is not muted. Our very first question this afternoon or this evening will be coming from Mr. Michael Roeg of Degroof Petercam. Please go ahead.
Good evening. First of all, congratulations on taking the next step and spending a bit more time in the Board of Directors, looking down on your successor and guiding him. Of course, I wouldn't leave you with a couple of tough questions. The first one: bookings have come down strongly, and prototyping sales have also come down based on the chart in your PowerPoint presentation. Should we expect a slow start in 2026?
First of all, the prototyping is something that fluctuates. There are milestones on projects and so forth. I think the prototyping is at a good level. Remember, this starts from zero every quarter, and it's all about new contracts and new activities. It's still a substantial business development activity ongoing. I'm quite happy about that. The production bookings, they indeed are weak. We still have quite a good backlog that represents roughly almost two quarters, so it's a bit less. It is, of course, too early to say, but it's a sign of weakness in the market. Guidance for the Q4 is still good. It's in the range of where we were now. Beyond that, visibility is low. We could see maybe a weaker start for next year.
Is there a decent amount of backlog for way deep into 2026, or is most of it typically scheduled for Q1, Q2?
This backlog is so customers, they order. Now typically when they need the goods, typically all this backlog is mostly to execute on deliveries in the quarters to come.
Okay. That's reassuring at least. I have a question. If I compare your sales in Q3 with those of Q2, they've grown by $13 million, yet the sequential trend in gross profit is minus $2 million. This is not explained by depreciation and normalization because that was the same in the two quarters. Something was in your cost of sales, something strange. Can you explain that?
Yeah, there is an effect of inventory. The work in progress, I mentioned, we have shorter cycle times because we have improved capacity. The cycle times come down, and that is very much appreciated by our customers, so we can deliver faster. As a result, the work in progress is lower, and that has, in the quarters where we decrease this WIP, a negative effect on the profitability.
Is that something that only hits your P&L once to the lower work in progress level, and if it remains at that level in Q4, you will not have that push down?
Yeah. This is an effect that we have when the WIP. This is a typical effect when the activity in the FAB decreases or the cycle times go shorter, and the valuation of the WIP decreases. When we come back to a steady state, then this effect is not there. You can also have the opposite effect if bookings go up. Loading in the FAB goes up, you have the opposite effect where the revenue is not yet there, but the WIP increases and the WIP is valued, and therefore it has a positive effect, could have a positive effect on the margins.
If I do the calculations, it's around $4.5 million- $5 million impact in the quarter. This is above average, I guess, for normal trends, correct?
Yeah. This is, if we look at the full year, it's even bigger. We also have inventory correction or WIP corrections in the previous quarters.
Okay.
I think it's coming to a stabilization by the end of the year.
Okay. My next question is about Texas. You mentioned in the press release that there will be capacity expansion in 2026 towards the end of the year. How much CapEx is there involved with this particular expansion program?
There is no CapEx involved. What is mentioned there, that is equipment that are already delivered and paid for, that will be qualified and will be added to the operating and the production lines.
Okay. This is part of the existing program that has just been completed. There's no additional expansion program currently planned?
No. For now, there is no expansion with additional cash out planned.
Okay. During the capital markets day, you mentioned that there would be discussions about further automation of four of the six FABs. Is there anything that came out of that or a midterm plan for that?
This is an ongoing process that we're working on, on more automation. This is mostly labor and IT and that kind of things. It's to a lesser extent related to CapEx. There might be some CapEx, but that is minor compared to the equipment investments we do.
Okay. My final question, very quick one. There was $2 million of other income in the OpEx. Can you explain what that was for?
There was a sale of a tool.
Okay. Good. That's it from my side. Thank you.
Thank you.
Thank you very much, sir. Next question will be coming from Emmanuel Matot of ODDO BHF. Please go ahead.
Hello, Rudi. Hello, Alba.
Hello.
I have three questions. First, for Rudi. Could you comment about your decision to step down from your role of CEO? What are the motivations behind that very important decision for you? Second, it's too early to guide for next year for sure, but with the current visibility you have and the ramp-up of significant production capacities, are you confident at this stage for further sales goals next year? Third, I wanted to know if you compete in some spaces with GlobalFoundries because it has just announced a significant capacity expansion in Germany, and I wanted to have your view on that. Thank you very much.
Yeah. First of all, with respect to the organizational change and me stepping down as CEO, as a manager or as a founder of the company, we always had in mind that it's important to grow succession and move on. I think the team is very well prepared, and Damien Macq is ready to take that role, in my view. Therefore, I decided or started thinking about this a while ago. I think now is the right moment for him to take over, and I think he's very well placed to do it. Second question, sorry, I didn't know the question was GlobalFoundries. There was a question on GlobalFoundries, Dresden. GlobalFoundries, Dresden, they're in different. I don't see this as a competition to X-FAB. They're maybe also doing automotive stuff, but that's more into ECU type processors and FD SOI for other applications. It's different type of SOI.
X-FAB is also doing a lot of SOI, and we're very successful in SOI, but it's high voltage SOI. That has different characteristics than the FD SOI, which is more used for lower voltage systems and lower power applications. The third question was.
It's about the visibility you have now. It seems to be limited, but also we can expect significant production capacities next year. On products, you are fully loaded.
Yeah. So.
Confidence or sales goals next year? Clearly, you don't want to comment at all?
Today, the capacity, we are not in allocation anymore as compared to a year ago. The revenue, the output is mainly driven by the demand in the market that we're following one-to-one now. If demand is there, we'll be growing. We will follow the demand. We're able to, if demand is there, we're able to anticipate on it, take advantage, and grow. If it's not there, of course, we're now dependent on the market. Of course, all the new projects that we are in the pipeline and we gradually are rolling out.
Thank you very much.
Thank you very much as well. I'm going to move to Robert Sanders of Deutsche Bank. Please go ahead, sir.
Good evening. Hi, Rudi. Best of luck with your next role, and welcome to Damien. I just had a question about Nexperia. You're in the European automotive supply chain. There's been a lot of warnings around line stoppages from both European and non-European OEMs, talking about significant risk, weeks of inventory. Can you give us your take on how severe and serious the situation is based on what you can pick up? I'll have a few follow-up questions.
Yeah, I'm following this, of course, also closely. Most of it is what I also pick up in the press. What I know is that Nexperia is indeed, it's more, seems like low-tech components, but they're very good at it, and they're producing that in very high quantities. They have in some areas significant market share. I think for most of those components, there are replacements. It's a question whether these, if there are shortages, whether the replacements can be ramped up quickly enough. To my knowledge, there is not yet line stops, but I cannot tell how far it is off.
Yeah. I mean, based on your experience, what they do is they do small signal logic components like diodes and BJTs and stuff like that, but they are used in body comfort, lighting, BMS interfaces, sensors, safety, just a lot of low-value components. As you say, they have very high market share. I mean, based on what you've seen in your previous job, I assume you would be looking at six to nine months to requalify on a competitor. Is that the sort of timeline?
If you look back at the COVID situation, if the market is normal, then all these things take time. However, if there is a threatening line stop, things can change quickly, and there is a lot of agility and creativity. I think it's not so much a matter of qualifying it. In most cases, people are very agile and flexible to move if it's really needed. It's more a matter of whether the components are in sufficient quantity from alternative sources. I also typically see there have been cases in the past, also when a Sumitomo plant was blown up years ago. That was producing 50% of these particular chemicals that were absolutely needed everywhere in the semiconductor industry. They had 50% market share. Also there, the dynamics, the agility of the whole market, then that came in motion, and finally it sorted out. Let's see how this will turn out.
Got it. Just a question about China. Obviously, since we last spoke, China has turned downwards. There's been production cuts at BYD and Li Auto and all these other guys, too much unsold inventory. How have you seen that manifest in your business, whether it's direct with Chinese customers or indirect through Melexis?
I think that's too early. Yeah, too early to say. We're somewhat further in the supply chain. It's difficult. We don't have good visibility except that we see our bookings in the third quarter that were lower than the previous quarter, particularly in the automotive segment, a bit across the board, as I mentioned. The bookings in industrial, they were good. Yeah. It seems to be more on the automotive side that I see the weakness.
Just one last one on OpEx. How should we think about the impact on OpEx of all these various different expansions, whether it's on G&A or just on your cost base more generally? Thanks.
That we do not expect an effect except the fact that once these expansions are active and producing, then they come into the depreciation. It will have an effect on our depreciation.
Got it. Thanks a lot.
Thank you very much for your questions, Mr. Sanders. Ladies and gentlemen, as a reminder, if you have any questions, please press star one. We'll now go to Guy Sips of KBC Securities. Please go ahead.
Yeah. Most of my questions were already answered. They were also Nexperia related. I have one question on the data center. Do you see there the positive trend, do you see that accelerating, or is it just on a continuous pace as it was over the last quarters, or do you see a real improvement since, let's say, the capital market day? Thank you.
I think in the revenues, we see a gradual progress. In the beginning of the year, we saw strong activity in data center. That continues, but it is complemented now also with better demand for industrial and renewable, so inverters for renewables and also a bit of automotive. The silicon carbide activity is broadening. I think that a lot of the data center growth still has to come. It's not yet on. First of all, the architectural change that uses more silicon carbide in data centers still is oncoming. I think also all the announcements on CapEx and so forth, they start to build buildings, but they're not yet installing the infrastructure yet.
Can you put a kind of a timeframe on this?
No, I cannot. I think some of the customers of us who have announced activities with the data center companies on 800-volt architectures and so forth, they're rather talking about real ramps in 2027.
Okay, thank you.
Thank you very much, sir. Next question will be coming from Mr. Luc De Sout, who is a private investor. Please go ahead, sir.
My question is actually the following. If AI is applied, let's say, on the development of the prototypes, is it possible to substantially reduce the throughput time for the development and the prototyping?
Yeah, that's a good question. That's not really the case. In the digital world, there is more activity on automating design environments and so forth. I think there it could have an effect. On the analog mixed signal designs that we're doing, so far there are people looking at it at research institutes, but nothing that is practically usable to my knowledge.
Okay. I have a second question. Is it the automotive business, parts of it, is it coming to end of life and that has to be replaced by new products, new components, or in which stage are we?
There is, of course, a continuous flow of innovation, but we have existing products that exist already a couple of years that are also being designed in electric vehicles in certain functions. That continues, but it's not that there is an abrupt end of life of certain components. Of course, if combustion engines are used to a lesser extent, if you have applications like a lambda sonder or pressure sensors that go into an exhaust system of a combustion car, that will gradually phase out. As you hear, there is a push in Germany to extend the lifetime of combustion engines and so forth. I do not see an abrupt change and see this rather as a gradual change over the next 10 years.
Could you elaborate a little bit more on the Chinese market for our business?
As X-FAB , we have direct Chinese business. It's around 10% of our business. Indirectly, we have also, yeah, our customers are selling into China. I think the direct and indirect business of X-FAB , it's maybe closer to 35% or so of our revenue that goes into China. What our customers do, I have less, that's a bit farther away. I would have to refer to the conference calls of our customers. What we sell directly in China are predominantly technologies that are to a lesser extent available in China. That's typically BCD-on-SOI for high voltage smart systems, for motor drivers, battery monitoring systems, and so forth. There we see continued interest also for new designs with our customers because these technologies are not immediately available in foundries in China.
Okay, thank you.
Thank you very much for your questions, sir. Ladies and gentlemen, as a final reminder, if you have any questions or follow-up questions, please press star one at this time. We'll now move to Trion Reid of Berenberg. Please go ahead.
Hi, there. Yes, Trion here from Berenberg. Just also wanting to add my best wishes really for whatever you're going to do in the future. I had two questions on the results. The first was just around the fact that you talked about the results being strong, but the order intake weak. I'd be interested if you have any comments around the pattern of orders through Q3. You saw sort of any trends, or you're just seeing more lumpiness or short-term ordering. Just be interested to get any more color on that. My second question was just on the CapEx, which was pretty low in Q3, but your Q4 guidance seems to suggest it will actually ramp up quite significantly in Q4. Just to understand why that is and what that sort of implies for next year as well.
Yeah, so your first question with respect to the bookings, yeah, that's what it was in the third quarter. If you ask what happened in October, that's somewhat a continuation of the Q3. The peak or the low amount of CapEx in Q3 is indeed less than what we forecasted. This has to do rather with we're not pushing the throttle on our expansions in Malaysia. This is just a delay. We have not canceled anything, it's just that there is a slower rollout, and therefore also the invoices come in slower, and so the cash out is also somewhat less. In Q4, we expect that it will increase. This is not new CapEx, but it's just a shift of things from Q3 in Q4. We'll have to see, maybe there will be some shift from Q4 into Q1 next year. The increase that we can expect in Q4 is not a sign for next year. It is just the balance from Q3 that's shifted in Q4.
Okay. Great. Thanks. Just to follow up on the order intake, you're suggesting that there was not a decline through the quarter, that the quarter was weak for order intake in all three months?
No, it was somewhat flat over the quarter, yeah. It's not that there was a sudden effect at the end or so. It was somewhat flat over the three months.
Okay, great. Thank you very much.
Thank you, Mr. Reid. We have a follow-up question. This time, coming from Mr. Robert Sanders of Deutsche Bank . Please go ahead, sir.
Hi. Just on the Kuching ramp and the billion-euro expansion that you've done, is the idea to continue to push that ramp, even though the demand is not really there, just to sort of get the economics going? Because right now it's a lot of tools, but not a lot of revenue. Is the idea to basically freeze that plan until the demand is there?
The plan is to continue with the rollout of the equipment and to install it, qualify it to be ready for demand that can come. The equipment is mainly for our 180 nm BCD-on-SOI. We have good design wins and a unique position in the market. We feel confident that this will pick up, and we want to be ready.
Is there any plan to reduce or exit any legacy facilities? I think you've already said you're going to end of life effort by the end of 2026. I'm just trying to understand how much of your capacity that's quite old now is sort of going to get wound down as part of this upgrade.
This is in effort. We're making the transition from, yeah, already for many years, we're transitioning to more microsystems business and gradually exiting the CMOS there. The end of life that we announced there was for 0.6-micron CMOS. Signal CMOS is also SOI in there, and that will run till end 2026, a little bit in 2027. Then there will be one clean room there that we have. There are three clean rooms on the site there, and there will be one clean room that will be closed.
Got it. Maybe a question for Alba. What is the France run rate annualized at the moment for revenue and just Corbeil?
Corbeil is currently at $54 million per quarter at the moment. It was the highest quarter that we recorded now in Q3, so it's ramping up significantly. We also invested there in additional tools, as you know, and we are now running only X-FAB Technologies since a while. The efforts start to pay off.
Got it. What's the EBITDA of that facility?
We don't give EBITDA breakdown, as you know, because we don't produce everything on one site. Some of the products are shifted from one site to the other, and it's quite difficult. It's misleading to give an EBITDA breakdown by site.
Okay.
You know that we start some products, we start in one factory, then we continue in other factories and so on and so forth. As I said, it's misleading.
Got it. Just last question. If Melexis is able to get BCD-on-SOI processes from HH Grace in China, what does that mean for you? Does that mean that you will lose 30% of Melexis's business, or is that something you don't think is a likelihood?
I don't know if HHGrace has the BCD-on-SOI. I think definitely not in the quality and the features that we are offering. Anyhow, if a customer designs a new product in another fab, it takes a lot of time to qualify and transition. In the meantime, all the existing business typically stays until the products are really end of life. I don't see an immediate effect.
Got it. Thanks a lot.
Thank you very much, Mr. Sanders. As we have no further questions at this time, Mr. De Winter, I'll turn the call back over to you for any additional closing remarks. Thank you.
Thank you very much, everyone. I'm looking forward to hearing you again on the 5th of February for the Q4 results that will then be together with Damien. I will be then handing over to Damien. Thank you very much and have a nice evening.
Thank you. Goodbye.
Thank you. Ladies and gentlemen, that will conclude today's conference. Thank you for your attendance. You may now disconnect. Have a good day and a good night.