Hello everyone, and welcome to the presentation of Siltronic's Full-Y ear 2025 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 Stephanie Malgara, Senior Manager Investor Relations at Siltronic. Please go ahead.
Thank you, Cynthia. Welcome everybody to our full- year 2025 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 full year 2025 reporting are available on our website. I now turn the call over to Michael for his.
Thank you, Stephanie, and a warm welcome also from my side. Let me start with the key messages of today's call. 2025 shows robust results in line with our guidance, even though the year was influenced by significant headwinds, notably FX effects, continued price pressure outside LTAs, and the closure of our SD business. Importantly, sales in 2025, excluding SD and FX effects, were on prior year level, which highlights the resilience of our business. The momentum in Siltronic's end market developed stronger over the course of the year, resulting in a rebound in demand for 300-mm products. This is also consistent with the broader industry sentiment, where AI-driven has been particularly strong in memory. However, it is important to note that DRAM chip revenue is currently still decoupled from memory wafer demand.
This means that the AI-driven growth does not yet translate into a comparable uplift in wafer volumes. Let me now give you a broad overview of our financial performance in 2025. Claudia will then provide more details in just a moment, and at the end of the presentation, I will walk you through our 2026 guidance. Sales came in at EUR 1.35 billion, which is down 4.7% versus the prior year. Our profitability remained robust with an EBITDA margin of 23.5%. Both figures are in line with our guidance. The EBIT margin fell to -2%, coming from 8.9% in 2024. CapEx again remained significant with the continuous focus on our new 300-mm fab in Singapore.
Compared with the previous year, however, we significantly reduced it to EUR 369 million. Consequently, the net cash flow improved compared to the previous year, yet it was still negative at EUR -85 million. Finally, net financial debt ended the year at EUR 837 million, up from EUR 734 million in 2024. Let's move to the financials. Claudia, please.
Thank you, Michael. A warm welcome from me as well. I'm pleased to guide you through last year's results and highlight the key developments. Let's first take a closer look at our P&L for fiscal year 2025. Our performance came in fully in line with our guidance and was supported by a strong fourth quarter. Sales reached EUR 1.35 billion, down 4.7% year-on-year. On the positive side, wafer volumes increased in 2025, reflecting the global end market growth and with it a clear pickup in demand for 300-mm wafers. The decline was mainly driven by FX movements, pricing pressure outside LTAs, product mix effects, and the shutdown of the small diameters line, which explains roughly one-third of the year-on-year change. Looking at the quarterly development, Q4 sales increased significantly compared to the soft Q3.
This uplift was mainly driven by volume shifts from Q3 and early 2026 into Q4, as previously communicated. In line with the reduced sales level, EBITDA declined by 13% year-on-year to EUR 317 million. However, we were able to mitigate part of the negative sales impact through targeted cost reduction measures and fixed cost dilution from higher wafer volumes. The EBITDA margin amounted to 23.5%, a solid result considering the challenging environment. It underlines our cost discipline throughout the year. EBITDA in Q4 increased by 31% quarter-on-quarter to EUR 86 million, driven by the higher sales level and the resulting positive FX cost dilution. Full- year EBIT came in at EUR -26 million, corresponding to an EBIT margin of -2%.
Besides the lower EBITDA, a key driver was the start of depreciation of major assets of the new Singapore fab beginning in August 2025. This also impacted Q4 EBIT significantly, amounting to EUR -34 million. Net income for the year was EUR -78 million. In addition to the development of EBIT, rising interest expenses weighed on the financial result, reflecting the higher debt level. We also recorded a non-cash effect in Q4 from the revaluation of deferred tax assets, which had an impact on our tax result. As Michael mentioned, excluding the SD and FX effects, sales in 2025 were essentially in line with the prior year. This is a very positive message underscoring the resilience of our underlying business despite the challenging environment. As you know, Siltronic is significantly exposed to changes of the U.S. dollar versus euro.
Over the course of the year, we faced notable FX headwinds as the dollar weakened to an average rate of 1.13 in 2025 compared to 1.08 in 2024. Regarding SD closure, as communicated, the shutdown impacts our top line in the low single-digit percentage range. This is illustrated in the bridge shown on this slide and is one of the key drivers of the year-over-year change in reported sales. Since we shut down the line in mid-2025, the effect is concentrated in the second half of the year. As a result, 2026 will capture the full- year impact of the SD closure for the first time. Let me elaborate on FX as it remains a key factor for Siltronic. As you can see on the left, our business is highly exposed to the U.S. dollar.
In 2025, more than 80% of our sales were effectively U.S. dollar-linked, while most of our cost base is euro-denominated. This explains why we are so sensitive to any exchange rate movements. To give you a sense of the magnitude, based on our 2025 exposure and the euro-USD FX rate of 1.13, a change of $0.01 would impact our full-year sales by around EUR 10 million and our EBITDA by around EUR 7 million before hedging. To manage this exposure, we apply a structured hedging approach. We combine operational and strategic programs, gradually hedging our expected net FX exposure up to 18 months ahead. This reduces volatility, even though larger and more persistent currency movements cannot be fully offset. Let's turn to the balance sheet, which continues to show a solid and healthy structure.
At the end of 2025, total assets stood at EUR 4.8 billion, down 6% year-on-year. Property, plant, and equipment totaled EUR 3.5 billion. We saw a reduction of around EUR 140 million in this position, largely due to the Singapore dollar's depreciation. Working capital remained broadly unchanged. The decrease in trade payables was largely offset by a decrease in trade receivables and inventories. Operational cash inflows, combined with a partial drawdown of our syndicated loan in Q2, did not fully cover CapEx payments and debt repayment. Consequently, cash and securities declined by approximately EUR 130 million to EUR 531 million, while financial liabilities decreased by EUR 35 million. Finally, our equity ratio remained stable at a healthy level of 43%.
As you can see, our CapEx has been significantly scaled back since the peak in 2023, totaling EUR 369 million in 2025. At the same time, cash payments for capital expenditures amounted to EUR 380 million, slightly exceeding the invest level. Timing differences between CapEx and payments are influenced by factors such as the timing of asset additions during the year, completion of construction phases, or specific payment terms, effects we have seen very prominently in previous years. By the end of 2025, trade payables related to CapEx remained well above normal levels, driven by these timing differences. We expect this position to normalize in 2026, which will result in the corresponding cash outflows for past investments. At the same time, we will continue at a significantly lower investment level, as reflected in our 2026 guidance.
Let's now turn to net financial debt and the factors driving the year-on-year development. As shown on this slide, net financial debt increased from EUR 734 million at year-end 2024 to EUR 837 million at year-end 2025, a change of EUR 103 million. We generated a solid operating cash flow underpinned by an exceptionally strong fourth quarter. This performance was shaped by two key factors. Firstly, a high revenue level in Q4, and secondly, favorable working capital movements that provided an additional uplift to our cash generation. However, even net of the EUR 38 million received in Q4 as the final tranche of the FabNext investment grant, CapEx payments clearly exceeded the operating cash flow level in 2025. Let me also provide a brief outlook on 2026 at this point.
We expect a temporary and pronounced increase in net financial debt in the first half of the year, primarily driven by CapEx payments and working capital effects. Most notably is the substantial cash outflow related to the settlement of the CapEx-related trade payables described earlier. In addition, we anticipate an increase in day sales outstanding, temporarily tying up more cash. From this elevated starting position, net financial debt is expected to decline in the second half of the year. Let me also briefly touch on the composition of our financial debt. At year-end, total debt stood at nearly EUR 1.5 billion, of which around EUR 130 million remained undrawn. The maturity profile shown on the right illustrates that repayments are well spread over the coming years.
For 2026, we expect repayments of around EUR 100 million and interest expenses are anticipated in the ballpark of EUR 50 million. As previously mentioned, we closed the 2025 financial year with around EUR 530 million in cash and securities. Together with the undrawn revolving credit facility, this gives us solid financial flexibility. In addition, our balance sheet includes short-term prepayments of around EUR 10 million, which we anticipate being returned in 2026. This figure is now markedly lower than previously expected as a result of agreements with customers to defer certain refunds. With that, let me hand it back to Michael.
Thank you, Claudia. Before we turn to our outlook for 2026, allow me to make a general remark. Our expectations for this year reflect the market conditions currently visible. They do not include any additional impacts from a further escalation or continuation of the ongoing war in Iran. Right now, we do not see a meaningful immediate impact, but are closely monitoring the situation. Let me summarize what we currently anticipate across end markets in 2026. Overall, the outlook is positive. On a pre-inventory basis, we expect the wafer area consumption to increase by around 6% year-over-year in 2026, with servers clearly being the primary driver. After a very strong 2025, server-related demand is expected to continue growth, supported by ongoing AI investment and data center expansion. AI is pushing memory prices up, while at the same time memory supply remains tight.
This implies that capacity is being prioritized for AI-related demand, which is limiting unit volumes available for other end markets. Consequently, there will be a dampening demand effect for PCs and smartphones this year, especially in the lower end segments, which typically rely more on legacy devices and components. In addition, it's not surprising that 200 millimeter remains challenging since inventories in some areas of the power supply chain are significantly elevated. We expect an almost flattish year in the automotive sector, while the industry segment should resume growth. Let me provide some content on the memory segment, which is the current hot topic and is often discussed as the key beneficiary of the current AI momentum.
As the chart shows, DRAM chip revenue is expected to grow significantly in 2026, even though demand for DRAM wafers is projected to rise by a much smaller rate of 6%-7%. Let me explain the major parts of this difference. First, the most important drivers are price and mix effects, reducing the original growth rate by more than half. With supply remaining tight, memory chip pricing has increased significantly, and the product mix has shifted towards higher priced products, such as HBM. Consequently, revenue growth is huge even without a comparable increase in unit volumes. Second, we see an increase in bits per wafer, which means customers can produce devices that store more data per chip without increasing wafer starts. Technological progress and higher density mean that the larger bit shipment does not require the same increase in wafer starts.
As previously mentioned, memory fab capacity is essentially fully booked for 2026, as illustrated by the red arrow in the graph. Therefore, additional capacity, which many customers already announced, will take time to ramp and will not significantly affect the 2026 output. Third, we still see a small inventory normalization in parts of the supply chain that continues to absorb some of the volume uplift. These three effects help explain how this very strong DRAM chip revenue growth translates into mid-single-digit increase in demand for DRAM wafers. Coming back to the limited memory fab capacity, bringing new capacity on stream takes time, typically around one to three years. Overall, the mid- to long-term outlook remains positive. Higher AI CapEx should increasingly support wafer demand as investments in memory and leading-edge are expected to expand capacity.
Let's take a look at the key factors that will influence our performance in 2026. Starting with volume, we expect growth to continue, driven mainly by 300-mm, where demand and loading is picking up further. On the other hand, we see continued weakness in 200-mm, primarily because the power segment still has high inventories and is suffering from some end-market weakness. This will clearly impact the 200-mm wafer business in 2026. Regarding pricing, we see continuous price pressure outside our LTAs, especially for 200-mm products, while in 300-mm, we see first reasonable spot prices. Regarding FX, the impact remains substantial given our U.S. dollar exposure. For 2026, based on our FX assumption, we expect the translation effect to be broadly similar to the prior year level, meaning FX remains a relevant headwind.
Additionally, please keep in mind that the SD line closure will impact sales for the entire year for the first time. Putting this together, we expect sales in 2026 to be at prior year level, excluding SD and FX effects, while the reported year-on-year development is expected to be in the mid-single-digit percentage range below the previous year. Let me briefly outline how we will continue to manage the headwinds in 2026 with a clear focus on CapEx, costs, and cash. Firstly, we will maintain strict CapEx discipline. After the peak investment phase, we are running at a significantly lower investment level and continue to be very selective on new project approvals. We prioritize only those projects that are essential and fully aligned with our strategic roadmap and continue to invest in maintenance capability and innovation.
Secondly, we will continue our full-scope cost program, addressing all major cost drivers across the organization. The objective is to further improve efficiency and secure substantial savings while further developing our technical capabilities and our customer service level. Thirdly, we keep a strong focus on other cash measures, in particular a comprehensive working capital management. Overall, these measures are designed to strengthen our financial resilience and support our flexibility in 2026. As previously mentioned, we expect the market environment to remain challenging. Against this backdrop, we guide for sales in 2026 in the mid-single-digit percentage range below 25 based on a euro-U.S. dollar exchange rate assumption of 1.118. On a comparable basis, meaning excluding FX effects and the SD line closure, we expect sales to be around the prior year level. For profitability, we guide for an EBITDA margin between 20% and 24%.
We expect a soft start in 2024 below average regarding sales and EBITDA margin. Depreciation is expected to increase significantly in 2026 due to our investments in the 300-mm business. We already indicated this development in previous communications. Most of the increase stems from our 300-mm operations in Singapore. In addition, our depreciation periods are in general comparatively short, which leads to a higher annual depreciation charge. We guide regular depreciation between EUR 490 million and EUR 520 million, and therefore, EBIT is expected to be significantly below the previous year. Turning to investments, we expect CapEx between EUR 108 million and EUR 220 million. As explained before by Claudia, cash payments for CapEx are expected to exceed this level. Thus, we expect net cash flow to be in the range of the previous year.
Already during our Q3 conference call in October, I presented a version of this slide. Since then, the list of awards has grown even further. It now also includes recognitions from Micron and ST. These additions underscore how broadly our customer base acknowledges our performance. The awards are a strong validation of our technological leadership, our operational excellence, and our reliability as a long-term partner. Strong customer proximity not only reinforces our position as a trusted partner, but also helps us deliver solid results in challenging market environments. With this, we conclude our fiscal year 2025 results presentation, and Claudia and I are happy to take your questions. Thank you very much for your attention. Cynthia, please open the Q&A.
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 the mute function is turned off to allow the signal to reach our equipment. Again, press star one to ask a question. We'll pause for a moment to allow everyone the opportunity to signal for questions. The first question comes from Harry Blaiklock with UBS. Please go ahead.
Good morning. Thanks very much for taking my questions. The first is just around the prepayments. You mentioned that customers have allowed you to push back prepayment refunds. It looks like they've been pushed back quite a few years with around EUR 300 million being pushed out beyond five years. Wondering whether you could give some color on that. Is there anything to read from, kind of from that on your view, your assessment on kind of midterm demand?
Yeah. Thank you, Harry. Of course, as we highlighted with our last chart, we are very close and let's say very successful with our customers these days. With some of them, we had those conversations. As you remember, LTA's volumes sometimes have been pushed out to later times. In exchange, so to say, we agreed with certain customers also to push out repayments of the prepayments for a certain period of time. For confidentiality reasons, we cannot tell you a great deal of details around the timeframe, but obviously you see it's a quite nice effect for the year 2026, where initial assumptions have been significantly above the number of EUR 10 million, which we report today.
Got it. Makes sense. Then maybe one for Claudia, just around the 2027, 2028 maturities. Seems like the undrawn syndicated loan will probably be used for the 2026 maturities, and then you're pretty close to the EUR 500 million that you said you'd want to maintain, just the EUR 500 million cash balance that you'd want to maintain for running the business. It would be great to hear just what's the current plan to address those 2027, 2028 maturities.
Hi, Harry. Good morning. Yeah, it's clear that we also stressed it a bit that we start to refinance those maturities in 2027 and beyond that already in 2026. We are just evaluating the options. We have not made any decisions yet on the instrument also or the amount. Of course we are evaluating the options.
Okay. Got it. Thanks, Claudia. Thanks, Michael.
Thank you.
Thank you.
The next question comes from Constantin Hesse with Jefferies. Please go ahead.
Good morning. Thank you so much for taking my questions. I've got a few, so let me start with the first one. Michael, I'm just trying to not get confused anymore around what leading edge really means. The CEO of Sumco was quoted on their call saying that there are only two players in leading edge, i.e., he was referring to Shin-Etsu and Sumco. Obviously, you know, Siltronic has obviously been saying for a long time that you guys are also leading edge. Can you maybe give a bit of color on or maybe just get rid of this confusion on is there different? Are you just the leading edge in memory, not in logic? What exactly is. Just trying to get rid of this confusion. Where exactly is the difference here?
Yeah. Thank you, Constantin. You are right. Yeah, there are indeed kind of multiple leading edge definitions around. Some, let's say, smaller ones are referencing to leading edge as not just being smaller than 5 nanometer in logic only. Some would cover even some advanced memory, which I think is a wrong definition. The statement I want to make, no matter which definition, yeah. We are a qualified leading edge player regardless of the definition, regardless of the scope of only logic or memory. We qualified, we're supplying and commercializing leading edge products into all major leading edge players, no matter which definition you take.
By that you mean all definitions in logic and memory. You're literally at par with Sumco and Shin-Etsu, and what the CEO said on his call was wrong.
I don't reference to a competitor statement. I can only say we are a widely adopted leading edge player and commercializing leading edge products independent of even the detailed definition.
Okay. Still a bit confusing, but okay. The question number two is just on the operating business. Some of your peers have started announcing some business restructuring measures for 200 millimeter. Are you potentially taking any initiatives in 200 as well, given the weak demand environment? For 300, I found this actually quite interesting. One of your peers said that their new greenfield 300 millimeter will be fully utilized by the end of 2026. How should we think about your new Singapore fab? Are you basically also pretty close to utilized by the end of 2026, and that would mean additional CapEx?
Thank you, Constantin Hesse. With regards to 200 millimeter, I think you are right. Our peers highlight this for quite some time that the business is under pressure. We also said very clearly that it's the one that get the most pricing pressure. We do not have any decision taken or any plans for restructuring or consolidation of whatever nature, but we also monitoring the situation very carefully and we also listen, of course, to our peers being extremely vocal around this, which we are currently not. But of course, we also anticipating 200 millimeter being under some continued pressure also going into 2026, as we explained in the presentation. With regards to 300 millimeter, as you know, we are on the middle of the ramp of our Singapore fab.
We do not see an urgent need to add, you know, additional CapEx while even some CapEx pending and from old orders is coming into our fab. There's, let's say, capacity room in the existing framework. In due time, of course, with UTs further going up, we will watch when we have to take the next step. Currently, we feel well prepared and set up for the demand that has been coming last year and is announced for this year. It's a watch case for us, you know. It's kind of modular situation where we're in a comfortable position. The shell, clean room and all the infrastructure sits there, and we can then relatively smoothly ramp more capacity as needed. Currently, we feel fine with what we have and what we have planned.
Michael, can I just point on CapEx, with demand running the way it is, when would you potentially expect to have to start investing more into CapEx again to continue building out that fab?
We don't see it yet, yeah. Because as you know, our fab in Singapore is not a small one. We always said it's gonna ramp over multiple years. 5 years, 4 years was a number we gave out. With demand as we see today, we again, yeah, we are in a comfortable position. We can follow the demand easily. We have the privilege that now all major customers are qualified in our new fab, so we can work with this and also move volumes between our existing fabs and the new fab. Then we would take a decision at the appropriate timing, which we currently do not see yet.
Thanks. Last question for Claudia. A quick question on the balance sheet. I think you mentioned that you expect a decline in net debt from the second half of 2026. Is it fair to say that net debt peaks in 2026 and yeah, that's it. Thanks.
I don't want to speak forever, but regarding 2026, we expect, as I mentioned, a clear increase in net debt in the first half and a clear decrease in the second half of the year. That is planned, that is on purpose. That's how we see the net debt to evolve over 2026.
I meant rather if we look over the next three years now with the development around cash, is it fair to say that we peak here, or could we continue?
Yeah. Of course, depending on the market development. Right now we see a market or loading increasing in 300 millimeter, and this gives us quite a confidence for the future. We always have confidence in our future, but right now it's getting better. With that, I can't promise, but first half of 2026 will be a peak.
That's great. Thank you so much.
The next question comes from Martin Jungfleisch with BNP Paribas. Please go ahead.
Yeah. Hi. Good morning. Thanks for taking my questions. Also have a few. Maybe starting with 300 millimeter pricing. In your prepared remarks, you were talking about in 300 millimeter, you're seeing first reasonable spot prices. Maybe just to clarify what that means then, I mean, given that 300 millimeter utilization rate should be improving gradually, would you see some room for price increases perhaps for some of your memory customers by the second half? That's the first question.
Yeah. Thank you, Martin. Let me frame this a little bit. All what we said around pricing remains valid, yeah? First of all, two-thirds of our business is in LTAs, and in LTAs pricing is as contracted, so no change there. Secondly, price pressure outside LTAs is continuing and is in place, and it's particularly pronounced in 200 millimeter. That's what we always said, the lower the diameter, the more the price pressure. Now let's say the new bit of information we give out today is that we see for the first time examples with reasonable spot prices in 300 millimeter, yeah. I would not speculate today more, but it's a first new bit of information which we want to give today.
Okay. It's more like a stabilization rather than increase. Okay. Vice versa on 200 millimeter. I mean, you said there's still in LTAs like, but in new contracts that you are signing, is there still incremental price pressure, or is that, is the price pressure that you are putting into the guidance for this year, is that mainly like a rollover effect from last year?
I mean, I hope you understand we cannot be too specific about new LTAs and pricing rollover and new effect. What I can say is we always have the freedom. Yeah. If LTA conditions are not attractive, we don't have to sign, right? In terms of LTA, closing new LTAs, we would only do it if it really makes sense, also price-wise. 200 millimeter is under pressure. That's an effect we have to accommodate in the future business development.
Okay. Thank you. My final question is just on the input cost. I mean, you're expanding in Singapore. Singapore relies quite heavily on natural gas for power generation. Just what's your view there on, like, any impacts? Like, do you have any hedges in place? And maybe also on the other side, if you see any impacts on availability of industrial gases, for instance, that you're using in the epi process like helium, et cetera, from the conflict in Ukraine.
Yeah. Right now, we do not see any immediate impacts, which should concern us. Supply chain is intact, and, regarding prices, we have hedging in place, not only in Singapore but also in Germany. On the energy side, we feel quite comfortable. Please, I would like to remind you that, energy is in our cost position number five or so. Yes, we are energy intensive, but it's not that we heavily rely on energy prices. Of course, it's not nice if they are rising, but as I mentioned, we have hedging in place and, this should protect us from major negative impacts.
Okay. On the gases?
Same is true for gases. Supply chain is intact, so we do not have an impact here right now, and we-
Cool.
Do not foresee it right now.
Great. Thanks a lot.
The next question comes from Robert Sanders with Deutsche Bank. Please go ahead.
Yeah. Hi, good morning. Thanks for taking my question. Can you just talk a bit more about the gap between spot and contract? It looks like spot's slightly improving, but you know, what's the percentage delta today? And are customers, in light of longer lead times generally across the industry, looking to perhaps sign more contracts going forward? Or, you know, how you think about that two-thirds percentage? I have a few follow-ups. Thanks.
Hi, Rob. Thank you very much for your question. I think you will understand that we cannot talk about percentage gaps or great details there. However, yes, loading in 200 millimeter is increasing. It did increase already last year. It's continuing to increase this year, and that might give more opportunities. We see some customers considering their strategic 300 millimeter supply in more, let's say, detail. It's a good and positive dynamics for the wafer industry.
Got it. In FabNext, what are you actually doing right now? Have you stopped hiring? Are you kind of pausing FabNext? I mean, I think you got to 200K, which is only 20% of the feasible capacity. Where are you at in terms of getting that to scale, given that your CapEx guide is pretty low compared to the recent history? Thanks.
Yeah. I think we never talked about 200 or whatever in great detail. We continue ramping. As I said, we are now since mid of the year where we announced that the major customers are qualified. We continuously ramp volume with these customers. We have, from the first wafer investment, quite some space of capacity there. That is being ramped, of course, in synchronization, as we always said, with our existing 300 millimeter footprint in Germany. Then in due time, when we feel demand is getting, you know, to the capacity limit, which currently is not obviously seen nearby, we would then bring more equipment into the fab. I think it's a comfortable position.
We can follow the demand, and currently it's running very smoothly in ramping the fab.
Just last question. Have you actually reached cash margin parity in Singapore versus Burghausen? I guess the reason I'm asking is, you know, you have more automation in Singapore, but you probably have lower fixed cash cost amortization. So I'm just interested whether you've reached cash cost margin parity.
Let me put it like that. Breakeven always depends on how you allocate to the fab. This is one of our central activities that we do here. We allocate the volume where it's most reasonable. We do not comment on breakeven points of certain fabs or specific fabs. What I can say is that last year we talked a lot about ramp cost in FabNext, and that they put a burden on our P&L. Perhaps you've heard that I have not mentioned it yet, not because they vanished, but they dilute more and more.
With the volume that we bring in FabNext and with the ramps there, we see a clear fixed cost dilution there, and profitability there is getting better and better. We are very happy with the development of profitability in the new fab, which is, let's say, together with SSW, one company. Yeah, as I said, we are happy with the development there.
Great. Thank you so much.
The next question comes from [Mason Thompson] with Bankhaus Metzler. Please go ahead.
Yeah. Hi, [Mason Thompson] from Bankhaus Metzler. A few questions. The first one on the LTA topic. Do you face any LTA cliffs in 2026 or any contracts that run out?
Thank you, Mason. We do not indeed see an LTA cliff and during the course of 2026, no major LTA will expire. I think we mentioned that already previously. We look at LTA as a kind of portfolio. Sometimes one goes, one comes. There's LTA opportunities always, even in market down situations. We said roughly we want to have two-thirds of our business in LTAs. That's not written in stone, but it's a, let's say, a rough framework for us. Of course, we highlighted particularly around our fab in Singapore, 80% of the business there is in LTAs with that also correspond to those prepayments which have been discussed earlier today already.
Got it. The second question, just trying to understand your top-line guidance a little bit better. At mid-single-digit decline, that means your sales will be roughly down EUR 70 million, EUR 113 million FX in average 2025 versus your guidance EUR 118, which means we have EUR 50 million FX headwind there. You expect a volume growth of 5%-6%, at least the market volume growth. You have the small diameter business. Can you quantify that? What was the first half of 2025? Which basically, I'm trying to understand how much price or product mix impact do you anticipate here in your guidance, particularly if two-thirds of the business is LTA and the ASPs are quite stable there.
I think thank you, Mason, for this question. I think we were pretty clear on one of our charts that without the SD and the FX effect, we would be on previous year level. That means, roughly speaking, volume, price, and mix are compensating each other. I'm a bit reluctant to comment on your volume assumption. Yeah, we would then go into very detailed of market share developments, et cetera. You can assume that volume, price, and mix are a zero gain, so to say. Yeah.
Got it. It will be probably more the product mix, right? Higher, non-polished, wafers in 300 millimeter and some price decline in 200 millimeter probably, right?
I mean, we are also a bit reluctant to comment, but as we talk repeatedly about advanced specifications, leading-edge advanced memory being fully loaded, you can kind of derive, yes, it's more the mix effect as well. Yeah.
Got it. Another question regarding that was one of the previous questions already touching the leading-edge topic. Ask differently, if you are qualified for the really bleeding-edge nodes, and like TSMC, they build initial capacity for bleeding-edge when they go to 2-nanometer manufacturing node. Later, they add more capacities as they move volumes to this bleeding-edge, which then becomes, yeah, kind of leading or not leading-edge node at a certain point after 1-2 years. Can you say that you keep your market share stable when this happens?
I mean, when TSMC adds more capacities to the former bleeding-edge node, and they expand the capacities, you still keep your market share stable versus when you initially qualified at this bleeding edge?
Yeah. Thank you, Mason. I'm not sure whether I got the question exactly. What I can say is the following. One of our strategic focus area has been communicated, is of course, we want to be and we are a technology leader, and that particularly focus on leading-edge and advanced specifications. So we have, according to our, let's say, analysis, we have in this advanced specification, we have above average market share. If this segment is growing faster than legacy, which needs to be proven, yeah, because legacy also in there is growing significantly, then the share would grow correspondingly.
On the other side, we have to be aware that all those advanced specifications, particularly leading edge, when you have a capacity of a certain amount for legacy nodes, and you convert it to leading edge, then less wafers are needed in the same capacity as processing is needing more time and wafers, so to say, are circling longer in the manufacturing footprint. Therefore, there is also a kind of compensating effect. With new capacity. As you hinted and as we also showed for the DRAM memory, then of course that effect would be also overcompensated again. There are multiple things coming into play. For sure, leading edge is very attractive for us, and it's one of our key focus areas.
Got it. The final question on the 200 millimeter. I think your competitor, one of your competitors said yesterday a little bit around comments around 200 millimeter that they expect the peak of inventories behind that, then a mild recovery. Do you see any level of inventories in the industry, particularly in the auto where we can assume a new inflection point in terms of wafer starts and for your wafer demand?
We see still particularly in the Power and Industry segment, we see significantly elevated inventories that over proportionally affects the 200 millimeter business. Maybe just a note of caution. If some of our peers talk about 200 millimeter, they sometimes include statements around gallium nitride or SOI technologies, which we are not pursuing. Therefore, statements around inventories can differ whether the scope is more general or whether the scope is focused on silicon, and that's what we are doing.
Okay. Thank you.
The next question comes from Gustav Froberg with Berenberg. Please go ahead.
Good morning. Thank you for taking my questions as well. Just a quick one on DRAM, actually, just on the slide that you showed, in terms of, I guess, bit growth and bit density, and how it impacts wafer demand. Do you see that the current state of, I guess, technological advancement, means that there is a bigger drag on wafer demand today versus previous, shifts in technology? As a follow-up to that, I mean, does this mean then that with this going on, and if the answer is yes to question one, that we should expect, the wafer market to take longer to reach the sort of levels of previous years when it comes to shipments? Thank you.
Yeah. Thank you, Gustav. I think we would look at this more as a continuous development. It's not kind of over proportionally or even exponentially growing in terms of drag, as you call it. We also know, of course, that customers are reacting already to this. You know, maybe also the CapEx and the project roadmaps of the big, particularly memory, players. Then once they launch, of course, it's also a ramp for the wafers. Which, to be honest, is sometimes even a bit ahead of time as it starts already with first test and monitor wafers and those kind of activities, yeah. Therefore, I don't think there will be particular, let's say, delaying effects, as your question stipulates from this bit growth.
Okay. Super. Thank you.
The next question comes from Daniel Schafei with Citi. Please go ahead.
Hi. Good morning. Thank you for taking my questions as well. Basically, I just wanted to ask a few market assumption questions. First one being on your slide, I'm seeing that you're seeing smartphones, the end market being volumes being down 2%. With now the kind of quarter being done and a lot of the smartphone players talking about kind of volumes dropping, let's say 5%-10% or even worse, could you explain a bit what your assumptions are for this kind of 2%? That would be great to understand. Then also the second question would be also on market share, just coming back to that. Before you were usually stating stable market share and kind of that this is among the four big players, right?
I'm just wondering, are you still kind of when you're stating market share, is that still among the four players? Or are you also now kind of factoring in China, within that? Yes, sure. I understand they're maybe not in the very leading edge 300 millimeter, but they are adding capacity and that is a potential risk down the line as well. I'm just trying to understand how you see your share there as well. Thank you.
Thank you, Daniel. To your first question with regards to smartphones. I mean, our numbers we're communicating is, as we said, it's prior to all potential, let's call it a tariff effect. When you look at those numbers sometimes being communicated which are significantly pointing negative, let's make sure we don't mess up, quarterly communications with full year communications. That would be my first point. What we see is definitely that the kind of effect from the memory shortage and, all the. Not all, but significant parts of the available memory chips, particularly in the high end, all go into the AI segment, which continues growth. That leads to a certain shortage into the smartphone. Will it become worse over the year? To be honest, we don't know.
We said clearly we will report when we have let's say more visibility what happens in the Near East and whether that would also affect the overall let's say market sentiment. We will most likely come up with an update of the model in our next call. We are aware of those let's say announcements that are a bit more negative. On the other side there are also some more positive on the industry around. For the time being we feel the assumptions here are well set. You're right it's a kind of a worst case for the course of the year.
With regards to your market share question, there are not four or five players or even one more here and there reporting into this SEMI organization. This is the space where we have a lot of precision, a lot of detail, because all the players reporting here on a monthly basis. We know very well and very precisely what is going up, what is going down. In this space, we are moving in a good direction. We also, of course, look at the total situation, including China. Sometimes that information around China is a bit more, let's say, foggy and assumption-based. But what we see, of course, yes, there are capacities being added continuously. The Chinese wafer manufacturers develop. They keep developing technology and quality.
For the time being, they are focusing extremely on the local to local supply chain model, which is also supported by the China five-year plan. We also see that their ability is still, you know, not in a situation where they can do anything what we would call a leading edge or advanced memory. This is a worst case going forward. On the other side, we see also companies like TSMC having announced they wanna be less dependent on Chinese supply for, let's say, geopolitical reasons. We see the Chinese chip industry being burdened by some bans on the chip side, so they do not get advanced ASML machines, et cetera.
That means there's a certain burden to develop those leading edge and advanced technologies on the chip side in China, which is also a burden, of course, to develop, let's say, advanced specifications for the wafer manufacturers in China. It's a complex game for us. It's a worst case. We also, of course, are doing business in China, as you know, and our share of the business comprising what we call Greater China, so that's the People's Republic of China and Taiwan, did slightly increase when you study our annual report in 2026 versus 2025 versus 2024.
Thank you. If I may slip also in a modeling question for Claudia. Just to quickly understand, a year ago or so, you've mentioned that maintenance CapEx is around EUR 200 million. Now you're guiding EUR 280 million at the low end. Just trying to understand, did things shift? Is now kind of maintenance CapEx more something like EUR 160 million or? Yeah, could you just give us a bit more color on that? That would be great.
Yeah. We guided EUR 180 million-EUR 220 million for CapEx. Yes, we said EUR 200 million steady-state CapEx on average over five years with some years being lower or higher. This year is obviously lower than EUR 200 million, sorry. We cannot disclose any further details on how much the maintenance CapEx. By the way, our steady-state CapEx is not just maintenance, it's also capability and cost position or product mix CapEx. We cannot disclose the exact amount this year. Obviously it's lower than the average of EUR 200 million that we stated for steady-state CapEx.
Perfect. Thank you very much.
The next question, a follow-up question, comes from Constantin Hesse with Jefferies. Please go ahead.
Thank you. Just a very quick follow-up. Claudia, over to you quickly on the refinancing. I mean you're obviously looking at instruments and magnitude, but, you know, looking at the payback that you have to do in 2026 of EUR 100 million, and your cash buffer running close to the EUR 500 million as previously pointed to. I mean, I just want to say, can you comfortably say that refinancing these, given the current financial situation of the company, that you would potentially be able to keep interest rates in place, or would you expect interest rates to worsen? As a result, would you consider equity options instead?
Well, one general remark upfront. You mentioned EUR 500 million to be our cash buffer. We always said that we have no fixed amount. Our cash buffer always depends on the assumed cash outflow for our costs and investments, and we want to make sure that liquidity covers several months of payouts for cash costs and investments. 500 is not a fixed number that we have. That's as a general remark. Regarding interest rates, when we do financing, that heavily depends on the instrument that you take. For example, a convertible, for example, is much lower in interest rates compared to a term loan.
It's not clear yet which interest rate we will achieve when we do the refinancing. Regarding your question about capital increase, there are no specific plans to do a capital increase right now.
Sounds good. Thank you.
The next question, a follow-up question, comes from [Mason Thompson] with Bankhaus Metzler. Please go ahead.
Yes. [Mason Thompson] here again. Just a quick follow-up on the memory and on your slide 14. I was just wondering if I got that correct. You basically mentioned that the new capacities which memory vendors are planning till first wafers hit the market or you see the demand, it will take 1-3 years. I was wondering if I got that correct, and why this assumption. I mean, if I'm correct, 2024, all the memory vendors have converted their spare capacity to server-level DRAM, so using that basically as HBM memory. Now they're all fully utilized, full booked out. We have seen in Q4 that all those guys are accelerating their CapEx plans.
Historically, it took around 6-9 months, particularly when customers are double ordering. There was also always an incentive to bring capacities much faster online, to grab market share or volumes. Why would that be 1-3 years this time?
No, thank you, Mason. I mean, one to three years always starts the question when does one to three years start? We were not very precise around this. Yes, CapEx roadmaps have been again accelerated, but you have to have in mind that the memory also pulled the brake not so long ago. So construction progress was interrupted and now is resuming and maybe is also accelerating here and there. What we know, and that's the statement in our presentation today, is that we will not see most likely an effect in 2026 from this. Then in outer years, yes, there will be first effects.
As I hinted, even though such a chip factory is not fully fledged and running at full capacity, of course there will be first wafers being used in terms of test wafers, monitor wafers, and so on. It will be a smooth increase in wafer demand eventually. Our statement is we will not see a major effect from this yet in the current year.
Got it. Just a brief follow-up on this. I mean, one of your competitors stated yesterday that they saw already some rush orders, but they were not sure if that's sustainable or if it's just because some customers have very low inventory already. Do you see a similar dynamic? Are your memory customers giving you kind of extended visibility at this stage already, or is it still unchanged versus last year?
No, what we see is of course the volume dynamic is there. It's consistent. It started last year. It continues into this year. We see some of the memory players, you know, looking into, let's say, further strategic supply opportunities. Obviously the memory situation is driving a different attitude already into the chip manufacturers. They look maybe already a bit differently on the wafer situation now than they used to look maybe, as you stipulated, maybe a year ago. Yeah, that's absolutely right.
Thank you very much.
The next question, a follow-up question, comes from Martin Jungfleisch with BNP Paribas. Please go ahead.
Sorry, just one quick follow-up question on one of the earlier ones on the prepayment. Can you comment if the push out of the prepayment had any impact on pricing to those LTA customers? Has pricing been adjusted in any way to those customers?
Yeah. Thank you, Martin. A very short answer, no. No impact on pricing.
Cool. Sounds good. Thanks.
There are no further questions at this time. I will now turn the conference back to Ms. Malgara for any additional or closing remarks.
This concludes our Q&A session. Thank you for joining us today. We will release our Q1 2026 figures on April 29. On this slide, you can also see our next IR activities. Have a good day, everyone. Bye-bye.
This concludes today's call. Thank you for your participation. You may now disconnect.