Hello everyone, and welcome to the presentation of Siltronic Q3 2024 Results. Please note that this call is being recorded and streamed on Siltronic's website. The call will also be available as an on-demand version later today. Your participation in this call implies your consent with this. At this time, I would like to turn the conference over to Verena Stütze, Head of Investor Relations and Communications of Siltronic AG.
Thank you, Elaine. Welcome everybody to our Q3 results presentation. This call will also be webcast live on siltronic.com. A replay of the call will be available on our website shortly after the end of the call. Our CEO, Michael Heckmeier, and our CFO, Claudia Schmitt, will give you an overview of our financials, the current market developments, and our guidance. After the presentation, we will be happy to take your questions. Please note that management comments during this call will include forward-looking statements that involve risks and uncertainties. For a discussion of risk factors, I encourage you to review the safe harbor statement contained in today's press release and presentation. All documents relating to our Q3 reporting are available on our website. I now turn the call over to Michael for his remarks.
Thank you, Verena, and a warm welcome also from my side. As always, let's begin with the key messages of today's call. The third quarter of 2024 unfolded as expected and continued to be shaped by the challenging demand environment for wafers, largely due to still elevated inventory levels in the chip industry. In September, we achieved a significant milestone by successfully placing our promissory note loan, which attracted considerable interest from investors. Claudia will provide some more insights later. Regarding our new Singapore fab, we had to postpone some of the major qualifications to next year. As a result, we have slightly Adjusted our EBITDA margin guidance. I will provide more details on this in a moment. In summary, we remain on track to meet our full year 2024 guidance. Let's now take a high-level overview of our Q3 developments.
Claudia will give you a detailed breakdown shortly. We achieved a modest quarter-on-quarter sales increase. Our profitability remains robust, with an EBITDA margin of 25%. Although we have moved past the peak of our investment phase, the still high CapEx needed for ramping our new Singapore fab has, as anticipated, resulted in a continued negative net cash flow. On a positive note, prices remained largely stable quarter- on- quarter, with only a slightly negative impact year- to- date. There are no deviations from LTA contracted prices. Now, Claudia will give you a deep dive into our financial performance before I come back with an update on the market developments, the new fab, and the guidance. Claudia, please.
Thank you, Michael. A warm welcome also from my side. Let's jump directly into our Q3 results. As Michael already mentioned, Q3 developed largely as expected, still impacted by the persistently weak demand in the wafer industry. Our sales reached EUR 357 million, reflecting a 1.7% increase quarter- on- quarter, driven by a higher wafer area sold. This increase was opposed by negative product mix effects. Prices and FX also had slightly negative impacts. In the nine-month comparison to the previous year, sales decreased by 9%, mainly due to a lower wafer area sold. Additionally, we saw slightly negative impacts from exchange rates, product mix, and prices. Our Q3 EBITDA was sequentially almost stable at EUR 89 million. The EBITDA margin came in at 25%, slightly down quarter- on- quarter.
The modest positive impact on the top line was counterbalanced by a negative FX hedging result of EUR 5 million. In the nine-month comparison, the FX impact is even more pronounced. The lower hedging result accounts for roughly one-third of the EBITDA margin decline from around 30%- 26%. As I already mentioned in previous calls, in 2023, we clearly benefited from favorable FX gains. Our Q3 EBIT amounted to EUR 29 million, slightly burdened by the impact of an increased depreciation. The financial result and tax result remained on par with the previous quarter, so that we concluded Q3 with a net income of EUR 19 million. From January to September 2024, the increase in depreciation is even more notable. This, combined with the effects on EBITDA, resulted in an operating profit that is nearly half compared to the same period of last year.
Additionally, the financial result, clearly impacted by our high CapEx payments, caused net income to be EUR 100 million lower on a nine-month comparison. Now let's turn the attention to the key developments on our balance sheet. At the end of September, total assets summed up to roughly EUR 4.7 billion , up from EUR 4.5 billion at the end of 2023. This change is primarily driven by our ongoing investments, mainly into our new fab in Singapore, which increased fixed assets by EUR 312 million . As a result, our cash and securities have decreased to less than EUR 300 million . The exceptional high CapEx related trade payables at the end of last year were significantly reduced during 2024 to EUR 254 million at the end of September.
The equity ratio remained at a very healthy level of 47%. Financial liabilities increased as we've drawn a bit more than half of our Schuldschein loan, EUR 200 million during the last nine months, bringing our loans in the balance sheet to over EUR 1 billion at the end of September. Customer prepayments amounted to EUR 575 million, a slight decline, a decrease from the end of 2023. As previously communicated, the refund of prepayments will exceed the new prepayments received this year. In the first three quarters, CapEx totaled EUR 470 million. While our investment level is still elevated, it has decreased significantly compared to last year and also on a quarterly basis. In Q1, we invested EUR 173 million, followed by EUR 141 million in Q2, and now down to EUR 94 million in Q3.
However, as previously indicated, this year's CapEx payments are significantly higher than our investments due to the spillover from last year. To put it into perspective, in the first nine months, payments for CapEx totaled around EUR 600 million. However, our CapEx, so the addition to property, plant, and equipment, was just over EUR 400 million, resulting in a gap of nearly EUR 200 million. Let's take a closer look at our debt situation. As illustrated in the bridge, Siltronic had net financial debt of EUR 356 million at the end of 2023. The high CapEx payments clearly exceeded our operating cash flow in the first nine months. On top, we had a cash outflow of EUR 36 million for the dividend payment.
In total, our net financial debt amounted to EUR 739 million at the end of September. I assume most of you are familiar with our financing status, but this time I would like to provide an update. In September, we have successfully placed a promissory note loan that attracted a strong interest from investors. With a significant oversubscription, we secured a total of EUR 370 million, which was paid out at the beginning of October. Therefore, this amount is not reflected in the Q3 balance sheet and cash flow statement. Some of you may not be familiar with the promissory note loan, known as a Schuldscheindarlehen in German. This instrument is popular in Germany and is a form of financing, sitting between a bank loan and a bond.
The investor base is very broad, ranging from small savings banks to large commercial banks and insurance companies. In our case, more than forty lenders participated in the transaction. For a company like Siltronic, the key advantages are the flexibility regarding terms and amounts, as well as the easy and fast process, as no placement on the capital market is required. As of today, we have drawn EUR 1.38 billion of the loans. A total of EUR 180 million is not called yet. With this, I hand back to Michael.
Thank you, Claudia. Let's turn to the market outlook. You all know this slide very well, and as you can see, not much has changed. Most end markets trend positively, and our end market growth forecast remains at around 6% for 2024. However, compared to our Q2 presentation, the automotive forecast reflects more negative news from both power players and the automotive industry. On the other side, smartphones are expected to perform better. The main growth driver for 2024 is servers, fueled by artificial intelligence. However, the elevated inventory levels need to be reduced, and this takes longer than expected. When looking at the segments, memory, logic, and power, the picture for memory and logic has not changed much since our last call. DRAM and NAND remain elevated, with varying levels depending on the customer.
In the high-end DRAM, there is more progress due to HBM demand for AI. In logic, inventory levels differ from customer as well, and overall, the excess inventories are decreasing slowly, and please keep in mind that some of the more positive news in the semiconductor industry are more caused by price rather than volume, and, you know, for us as wafer manufacturers, it's volume that counts. In the power segment, the news is more negative. Based on the latest data from Q2, inventories have further increased while we are awaiting the Q3 numbers. Overall, we are still dealing with elevated inventories, and it's not clear yet when inventory levels at our customers will return to normal. Before we discuss Siltronic's guidance, let me give you a brief update on the status of our new state-of-the-art fab in Singapore.
As previously communicated, we plan to ramp the new fab to a volume of approximately one hundred K by the end of this year. To be clear and re-emphasizing, given the current market situation where our fabs are not fully utilized, this refers to the installed equipment capacity. Looking into 2025, given the diluted market, we took the decision some quarters ago not to ramp the new fab at full speed next year as well. And now looking into 2026, as many of you will recall, we had originally planned to take a decision about the 2026 ramp speed by the end of this year. However, this decision is not needed anymore now because equipment lead times have shortened significantly in the current soft market. Therefore, our plan is to ramp 2026 according to the market demand and take the decision when inventories are further normalizing.
Major product qualifications in our new fab had been planned for Q4 this year. Those trigger the depreciation start of the new fab and have now been postponed to next year. There are several internal and external factors for this delay, including the soft demand situation we are facing. Now let's turn to the guidance for the financial year 2024. Our expectations remain unchanged, with 2024 sales projected to be in the high single digit percentage range below 2023. This decline is primarily volume driven, but we also anticipate slightly negative effects from FX as well as from product mix and pricing. Our EBITDA margin guidance has been slightly adjusted to a range of 24%-26%. This change is due to the delayed depreciation start of the new fab.
Until we achieve the major customer qualifications that trigger the new fab's depreciation, the so-called ramp costs will be treated as investments and do not impact our earnings. As a result, our depreciation and amortization guidance, which was projected to be below EUR 300 million, can now be specified and lowered to EUR 230 million-EUR 250 million. The guidance for all other KPIs had not changed since our Q2 call. Overall, I understand that today's news from Claudia and myself aren't the most encouraging. However, one thing is crystal clear to us about this industry. It's not a matter of whether, but rather when our industry will be back on the growth trajectory. The mid and long-term growth drivers for our industry are intact, and when we look, for example, at AI, this is just the beginning of it.
Thank you very much for your attention. With this, we close our presentation, and Claudia and I are happy to take your questions. Elaine, please open the Q&A session.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question. Please go ahead. Your line is open.
Hi. Good morning. I would have two questions. The first one being on sales. Just given that we saw now Samsung and Intel having more problems in the recent quarter, what has led to the maintained sales guidance for 2024? And maybe also to just better have an understanding on the swing between third quarter and fourth quarter, what has led to this kind of deterioration in the fourth quarter in comparison to 3 Q? Do you see there more cancellations or pushouts, anything like that? And my second would be to the fab ramp, kind of phasing and maybe also magnitude. If you could specify what you expect in 2025, that would be very helpful. Thank you.
Thank you, Daniel. With regards to your first questions around a specific customer, I really have to ask for your understanding that we cannot and must not comment on individual customers. Of course, as you know, Samsung is about our top three customer list, but our overall business is governed by a lot of customers, larger ones, smaller ones. And what we talk here is, of course, the aggregated sales view, that did lead to the developments we described. Your next question about a perceived Q4 deterioration, to be honest, we didn't. I didn't fully understand. As we have a full year guidance, you know, the Q3 year- to- date results, so there is not a particular Q4 deterioration to be talked about.
Yeah, if you want to have more details, I think you need to specify that question a bit more. And the February 2025, I mean, today we don't, we don't guide 2025, but what I said in the speech, of course, is applying. We ramped to the capacity I described. That will be in place as well for 2025, and then further ramp decisions will particularly depend on the further market development.
Thank you. Yeah. Just on the swings between 3Q and 4Q, what I just meant was the sequential kind of just given that 3Q was so strong and the sales guidance is maintained. I was just wondering what impacts do you see in 4Q? Thank you.
Yeah, there is not a particular thing happening. It's rather the more normal phasing between quarters and some volume shifts left and right. But I don't think there's anything we have to discuss or report here in great detail.
Thank you.
We will now take our next question from Florian Treisch from Kepler Cheuvreux.
Yes. Thank you very much for taking my question. So my question is simply, but this is probably the key question for the whole industry around the inventory situation. So you have probably seen shifts when it comes to expecting the inventory correction to end over the last couple of quarters, and I think we are still kind of in between. So I'm sure you have spent a lot of resources on getting a better touch on where inventory levels are, kind of, client by client. For sure, you're not commenting on a client base, but clearly, if you put all together, what is your best guess when we will see an end to this discussion?
As simply, if I look at your competitors kind of outlook for inventory or their feedback in the Q2 call, now let's see what they will tell us in Q3. The level is simply looking so high that it looks very likely that most of 2025 will be impacted as well. So what is your view on, let's say, when can we expect this kind of headwind to end? Thank you.
Yeah. Thank you, Florian. And if I had a clear answer to this question, maybe I would be the only one in the industry to give that clear answer that actually we, we don't have here. I mean, how do we do our analysis was maybe part of your question. Of course, we are accumulating all, let's say, public available information from institutes, from organizations, from bodies, and so on, and bringing it together in perspective with, I would call a bottom up view from our customers. There is a certain variety of precision we know from our customers or from some we know pretty well, but still sitting in their shelves. Others, they are not very open and very clear about this.
In this tail, we also rely more on public data, mainly from balance sheet information. Pulling all together, the true and difficult statement I have to make, it's still unclear when we see the full recovery of this inventory depletion. It's still a bit in the fog. Of course, you talk about 2025. Today, we don't guide 2025, but all I can say, it's really still a bit unclear when this will return to a normal situation.
Great. Thank you very much.
We will take our next question from Constantin Hesse from Jefferies.
Thank you very much for taking my question as well. Perhaps a different way of asking Florian's question would be, you know, if you look at the inventory situation today, so clearly, given the current production utilization that you're running, it is basically leading to the continued, even though slow, decline of wafer inventories for memory and for logic, which is definitely a good sign. Power, however, is increasing. So my question to you is, when you look at the magnitude of the decline in memory and in logic, but the increase in power, do you see any risk today from the current magnitude that you see? Do you see any major risk that we could see further cuts to the production utilization of Siltronic in the coming quarters?
Or are you comfortable with the current utilization that you're running in, and we will probably see, you know, the continuation of this utilization for the coming quarters until we see an improvement? Or do you think there is a risk that we could see a further deterioration in your production utilization? That's the first question.
Yeah. Thank you, Constantin. First of all, I think you will understand, we cannot comment on details of our own UT. Obviously, our competitors also would love to have that information. But what I can say is, of course, first thing, I definitely can confirm your view. Yeah, memory is coming down, but slowly, more continuously than heavily, so it takes some time there. Logic never was super elevated, but still is a bit elevated, so that's also a fair statement. And you're absolutely right, and I think the recent news flow from some of the major car makers is, of course, sadly supporting that statement. Power is increasing, and we talk here about the continuous increase now since mid of last year or even a bit longer, yeah.
So in this total mix, of course, what is the total ending of this is literally impossible to answer, but I can tell you clearly, we are in the middle of this, and we still have ongoing also volume shift requirements from our customers, yeah. So this is the situation. As you know, today, we don't guide 2025, yeah, but the statement I would like to give, it's not over yet, and we don't know when it will be over.
No, I get that it isn't over. I'm just wondering, is it a fair statement to say that you're comfortable today with the current production utilization that you're running? You know, that's kind of like, just kind of an idea. I mean, you do state, obviously, that these conversations are ongoing. So I'm just trying to get, you know, a bit of a view compared to your expectations. You know, do you see further risk of further cuts from now on, or are you relatively comfortable? I'm not expecting any improvement, you know, anytime soon, but I'm just wondering, in terms of the utilization that you're currently running, if you're comfortable with that?
Yeah, it's really difficult to comment. It will depend on, on, let's say, the detailed volume shift happening, at which time, at which customer. We don't have a, you know, a very complete picture yet for the next couple of quarters. So therefore, I'm not in a situation to answer your question very precisely, but I think there are a lot of unknowns still in the system, and those volume discussions are a continuous thing we have to deal with.
Okay. Then perhaps let's jump over to, I think one thing that will obviously be absolutely important to look at, which is balance sheet and cash flow, especially given what you just said, Michael. Because if you do, you know, if you do expect the situation to continue, and, you know, you didn't really answer that there could be risk of a further cut. But, I mean, I'm wondering now, if I look at your balance sheet, right? You just raised EUR 370 million, which, if you put it all together, it looks like your cash situation, you're actually pretty comfortable.
So looking at cash flow then, into next year, I know you don't guide anything, but the focus, obviously, that you will have on CapEx, and I'm just trying to really get a feel for CapEx, because your maintenance CapEx and, you know, you have answered that across various meetings before, is now running at about EUR 200 million, which, you know, is actually quite okay. So I'm wondering, in terms of cash flow generation, over the next couple of years, you know, how should we think about expansionary CapEx? Is that something that could come? If not, is it maybe fair to assume that when we look at expansionary CapEx from after Q4, basically starting in Q1, that you could, you know, bring it to a complete halt, and you only start making CapEx decisions again when you start seeing the situation improve?
Or is there a requirement to spend money still in this expansion, which isn't really dependent on the industry recovery? So I'm just trying to get a bit of a feel on, you know, how solid your balance sheet is, as well as, you know, maybe you could comment on some major maturities and kind of your cash flow profile in the next couple of years.
Yeah, thank you, Constantin. This was, let's say, a full load of different topics. I tried to answer a little bit more high level and would also pass on to Claudia to talk a bit more on some details as we are, of course, allowed to and can comment. You're absolutely right. In our CMD, we said there, there's a steady flow of, we call it steady state CapEx of around EUR 200 million. We can reiterate, that's not a fixed rule, and it's not happening every year like this. Yeah, some years will be a bit more, some will be a bit less. Definitely, next year we will still have something more given the fact that we are in this ramp flow in Singapore.
That's, that's very clear. Even though today, we don't give a number out for 2025. With regards to the ramp or further ramp in Singapore, which I hear as part of your question, the good news is that the lead time of equipment that would also trigger further major CapEx has been reduced. Yeah, so what we initially thought to be 18-24 months, now it's coming down significantly, and that gives us a bit freedom, yeah, to put those decisions at a later point in time, even for 2026. And I think that's a good news. And of course, combining these two, the total CapEx, the two answers will depend on the market development.
Yeah, a stronger market pickup would trigger more. Let's call it scale up the CapEx at a certain point in time. If the market remains soft and dull for a longer time, we would come further down. That's a bit what I can say on a high level, and maybe around cash and cash flow, I'll pass on to Claudia as well.
Yeah. I have just a few additional remarks from my side. Yeah, we have a steady state CapEx of roughly EUR 200 million per year. And then we have, let's say, spill over effects from orders done in the past. I would like to remind you that the lead times for equipment was very long, so we had to order some equipments already in the past, and that equipment is still to arrive. So there is some investment that we can't decide on. But, as we already mentioned, in former calls, we have a strong focus on CapEx right now. We only decide what's absolutely necessary to do.
But as Michael already mentioned, we are now in the situation that we can also decide on shorter notice due to the shorter lead times, and that's, of course, very good for us. Regarding cash flow, 2025, we don't do any statements right now. We will do so when we give our 2025 guidance.
That makes sense. Can I just quickly ask for a reminder on any major maturities, please?
Yeah, we start to repay some debt in 2025. As I already mentioned, we have a higher cash outflow for the repayment of prepayments than in cash inflow this year, and this will continue on a larger scale in 2025.
Understood. Okay, thank you so much.
We will take our next question from Harry Blaiklock, from UBS.
Hi, morning. Thanks for taking my question. I just had a follow-up on the 2025 ramp, and I know you're not kind of specifying how much capacity is coming online, but wondering whether you can comment on whether you think it will still be kind of meaningfully above the capacity that's coming on in 2024?
So roughly speaking, and thank you for this question, Harry. Roughly speaking, we will stay at 24 levels and decide on market developments. So the capacity installed is specified with 100K wafer per month. That could be beefed up a bit, and then at a certain point in time, as discussed, we need to take decisions about further ramp, means spending a CapEx on further equipment. So that's what I can say. At the end, the good news is really that the lead times shorten a bit for some of the key equipments, and we will take the decision as needed. The good news is really we can take it later than we initially thought.
As also in this current market environment, all the equipment market is of course a bit softer, and lead time have been relaxed quite a bit. So the ramp for 2026 can be decided in the flow of 2025, which I think is good news, gives us a bit more flexibility.
Got it. That makes sense. But in 2025, is there a potential scenario where you add less capacity than you did in 2024? Or am I kind of understanding that incorrectly?
Again, it depends on two things: the overall market development, how strong is the pull in different segments, in certain customers. And of course, as we stated very clearly, some major customer qualifications also will not happen in Q4 this year, but are postponed to next year. The exact timing of that one, of course, could also trigger more demand out of our fab there. As usual, our global operations team is allocating volumes on a global basis to our four manufacturing plants, and they always will do that in the best sense for the Siltronic group. On the one side, of course, there's a certain interest in ramping Singapore fast. On the other side, there's a very clear balance to that, having not excessive idle capacity and idle cost somewhere else.
Yeah, this a continuous discussion going on in our operations team, and the allocation is done continuously to maximize the benefit for the, for the group.
Got it. That makes sense. That's very helpful. And then one other question I had was just on the industrial and automotive end markets. The kind of wafer area demand growth estimates that you have seem pretty solid compared with, like, the operating picture that we're seeing at some of the semi manufacturers that are exposed to those markets. Industrial, for example, you've got some companies reporting kind of 20%-30% declines in revenue this year. So I'm wondering if you could comment on kind of your understanding of what's driving the difference there?
Yeah. So, so first of all, automotive, of course, we talked about the news flow already, particularly from some of the German car manufacturers. But of course, Germany is not everything. Like, I still anticipated a growth here. And then, of course, there's the e-mobility discussion coming a bit to a pause in Germany and some of the European countries, but not globally. We also always have to look at the global picture. Industrial, indeed, overall is for us and market-wise, the only segment where also our forecast exhibits a small decline. I think we talk about - 2% versus last year. And again, it's a consolidation. I think you rightfully pointed out that some of the players there posted really bad numbers.
But looking at the total picture, it's again a mix of different continents, segments, customers and end customers in the end, which leads in our model to a, let's say, smaller decline of just 2%. At the end, we always have to see the fact that our silicon area growth assumptions are both on two factors. Number one, our numbers. How much new plants would be built somewhere, how much new machines would be ordered that would trigger a certain silicon demand. And then, of course, more advanced machines, more advanced plants with more, let's say, digitization and AI elements, would also consume more silicon area per factory. So I think we have to have in mind that we always have the contents and the number driver in our assumptions.
So that totals for industrial so far for a -2% this year versus last year.
Great, that's very helpful. Thanks, Michael.
We will now move to Jürgen Wagner from Stifel.
Yeah, good morning. Thank you. I have two questions. The qualification delays you mentioned with major customers, was it across the board or limited to maybe one or two? And the second question, what we experienced in, let's say, this year, some Chinese semi companies seem to take share, market share from your long lasting customers, especially in Europe. How strong are your relationships to these local semi companies? Thank you.
Thank you, Jürgen. Your first question, it's indeed the qualifications delay. It's a mix of internal and external factors and really happens in the noted market environment. I would say there is rather strong pull and not a particular push from our side. We have qualified some lower spec products already, but these are not major products in the sense of, let's say, triggering then also the depreciation, and that would happen only last year. With regards to your China questions, of course, we also are active in China, as we communicate. 37% of our revenues are called now, I say a word which might be not correct, but it's Greater China. Yeah, so China and Taiwan together, we say 37%.
We also say very clearly that Taiwan is the bigger part of that. And in China, we always have to differentiate between local manufacturers and let's say all multinational companies that do manufacture in China, which would all account on the let's say China revenue in our case, yeah. Do we see particular shift in the in this play? That's maybe underlying your your question, and I think what we what we say all through three hundred millimeter, no, let's say significant changes there. Two hundred millimeter, as we said, also always in in the pricing side, is already a more mixed bag, which has to has to do with let's say more Chinese involvement there.
And of course, I would say it's most pronounced on the small diameters, yeah, 150 mm and below, where we definitely see a significant Chinese involvement, where we see overcapacity and a meaningful price pressure, which at the end confirmed very clearly our decision to exit that business. So we're in the middle of that process, and we will discontinue in the course of 2025. Yeah. I think that's what I can say on China. I was there a couple of weeks ago. I think we can say we have good customer relations there. It's a very kind of exciting situation, but also it's, of course, always under the umbrella of what's happening in the overall geopolitical situation and what's happening in U.S. elections in ten days' time from now.
We don't know, but let's always have in mind that could also change the China game a bit. I hope this was helpful for you.
Okay. Yeah. Thank you.
We will take our next question from Robert Sanders, from Deutsche Bank.
Yeah. Hi, good morning. I guess my first question is just on the prepayments. So you have this balance of prepayments as a kind of liability. How much of that will come out of your cash flow next year and the year after? And presumably, you can meet those obligations through the existing factories. So, I mean, I've got EUR 150 million and EUR 1 million in year one and EUR 200 million in year two, so just want to check I'm in the right area. Thanks.
Hi, Rob, this is Claudia. Just to answer your first question regarding how much do we have to pay back during the next year?
... Perhaps you have seen that in our balance sheet, we have short term current liabilities, customer prepayments of a bit more than EUR 70 million , which have to be paid back within one year, so to end of September next year. And of course, there will be some more. This includes Q4 this year, of course, and then there will be some more in Q4 next year. So you have a ballpark number for this. And we are able to produce this in our existing fabs and to provide the volumes to our customers for that.
Sounds good. And just on the after the Schuldschein, what is going to be your interest expenses, just quarterly or annually? Just so I understand the model. Thanks.
Yeah. Also here, just a ballpark number, roughly EUR 50 million per year. But please keep in mind that we also generate income from financial invest. So the net interest result is, of course, lower. And the 50 million, of course, is also depending on the interest environment, which is getting a bit more favorable, of course.
Just one last question, if I can sneak it in. In terms of the getting to a 100 K, sort of phase one of FabN ext. So just so I understand, when is, what is the current state of play about when you will get to a 100 K? I understand you've delayed, but what is the sort of thing we should model in? Thanks.
Thank you, Rob. I'm taking over here. The installed capacity by end of this year will be 100K. The true utilization, as we said, is of course below. We don't talk about detailed numbers as it's kind of, let's say, competitively relevant. On the other side, it's more happening, as I stated in the previous answer already. It's more happening in the global context. Yeah. Some of the volumes we can allocate left or right, and that is happening on the overall group consideration, yeah. So sometimes it makes sense to put a bit more already in those new capacities in Singapore. Sometimes it makes more sense to do certain activities in our, let's say, German plant.
So it really depends on the volumes and on the, let's say, specifications of the products. So the single number in Singapore is not particularly meaningful in this overall context.
But from an accounting point of view, what is the trigger to start, you know, depreciating all of this huge investment that you've done? I mean, is it first revenue out and then you start depreciating? It seems like you, though, are guiding to lower depreciating expenses. So it seems like that trigger point hasn't been hit, but at some point it's got to be hit, right?
Yeah, Rob, it's going to be hit next year. As we already mentioned, some of the major qualifications are still running, so those major qualifications are decisive for the start of depreciation. We have some qualifications already done in 2024, but as Michael mentioned, more for the lower specifications, so the major qualifications are not there yet, which trigger the depreciation start.
Got it. Thanks a lot.
Once again, if you would like to ask a question, please press Star one. We will take our next question from Stéphane Houri from ODDO BHF.
Yes, hello. Good morning. I would like to talk a little bit about the pricing environment in a context where the recovery of the market, notably in power automotive, seems to be a little bit delayed. Have you noticed any additional pressure on pricing? And can you make an update about the long-term agreements that you currently have? Thank you very much.
Yeah. Thank you, Stéphane. Pricing environment, what I can say is overall, we see this small price impact this year versus last year, and let's say it's more pronounced on the lower diameters than on the larger ones. So starting again from the most serious corner, the small diameters are quite under price pressure. There's an overcapacity, not a lot demand, and this whole segment is not, let's say, specification or innovation driven, and I think we can 100% see the rationale again behind our decision to exit that business. Here, pricing is a hot topic. Yeah. 200 mm with a mixed bag. On the one side, we have certain technologies that price very well and keep up pretty nicely.
Others a bit under, let's say, a more price pressure situation, and three hundred millimeter is definitely and clearly the most rigid and the most stable one in this context. In our LTAs, which, as you said, roughly cover two-thirds of our business. We have agreed certain pricing with our LTA partners in the contracts, and I can also reiterate from my speech, we don't see any deviations from those contracted pricing.
Okay. Okay. And I have a follow-up, if I may. I know you're not going to guide for 2025 at this stage, but you probably have seen, you know, the forecast from SEMI, which is expecting shipments going up by about 10% next year. When I look at the consensus around Siltronic, the growth is expected to be higher than that. I mean, again, I'm not expecting you to guide, but how are you preparing for 2025, and what are the big things to bear in mind when we look at our models for next year? Thank you.
Yeah, I mean, now, I really want to be careful and not give any bit of information out that we would regret in two weeks' time. So we're currently in the middle of, let's say, major discussions with our customers, so they also did not do their full business planning for next year. And there are quite some, let's say, swing factors in the area which would relate to meaningful volume shifts for us again. Yeah, and that could, of course, change our 2025 view substantially. As therefore, we are in the middle of it. We have a lot of unknowns and uncertainties still, and we will be more clear once those major customer negotiations have been concluded.
Yeah, I'm really not in a position to say much more or to even compare with consensus right now. So I hope for your understanding.
I fully understand, but just one precision. Why did you talk about two weeks? Is there something to be update, updated at this moment, or?
Did I say two weeks? I don't think so. Yeah. So it's a negotiation process, yeah, with a full load of customers, and it will come to a conclusion towards the end of the year, where we will then also put out maybe some more information around 2025. Today is not the time to do this.
Okay. Thank you very much.
It appears there are no further questions at this time. At this time, I'll turn the conference back to Verena for her closing remarks.
Thank you. This concludes our Q&A session. Thank you for joining us today. We will release our preliminary full year 2024 figures on the fourth of February, 2025, followed by our annual report in March. Our next conference is scheduled for the sixth of March, 2025. On this slide, you can also see our next IR events. Thank you, and let's talk again soon.
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