Good afternoon, ladies and gentlemen. Welcome to the Joint Earnings Call for the Fiscal Year 2024, hosted by GlobalWafers and Sino-American Silicon Products Inc. I'm Leah Peng, the spokesperson for GlobalWafers. Joining us today are CW Lee, the spokesperson for SAS, and Doris Hsu, the chair lady of GlobalWafers. Here's how today's call will unfold. Doris will begin with executive comments, providing insights into overall performance and strategic direction. We will then address investors' questions received in advance, followed by an open Q&A session. The call will last for 90 minutes and conclude before 4:30 P.M. A quick reminder, please keep your audio on mute. To ensure a smooth and interactive session, we have established two methods for you to post questions during this event, using the Slido feature for written questions and utilizing the Webex hand-raising function for live spoken inquiries. The first is Slido.
This is a text-based question. Throughout the meeting, you can input your questions using the Slido feature in Webex. Simply access Slido and type in your question. Our presenters will monitor Slido regularly to address your written questions. To ensure the efficient use of time, we encourage you to type in your questions as the meeting starts. The second one is live voice questions. Towards the end of the meeting, we will open the floor for live voice questions. If you wish to speak directly, please use the Webex raise hand function to indicate your intention. Once you raise your hand, kindly be ready to accept the host invitation to unmute your microphone when prompted. This will allow you to verbally pose your questions to the panel. Before we begin, I would like to remind you that today's discussion may contain forward-looking statements.
Please be aware that these statements are subject to various risks and uncertainties, which could cause actual results to differ materially from our expectations. Please refer to the safe harbor notice in our presentation. Now, without further delay, I would like to pass the floor to our chairperson for the executive comments on both GlobalWafers and SAS. Doris, please.
Thank you, Leah. Good afternoon, ladies and gentlemen. Let me begin with GlobalWafers. Today, we have both GlobalWafers and SAS. Let me begin with GlobalWafers. If you have GlobalWafers presentation material, please turn to page five. Let me start with our financial highlights. GlobalWafers consolidated revenue for the full year of 2024 was TWD 62.6 billion, representing an 11.4% decline year-on-year compared to the previous year. However, it still recorded the third highest revenue for the same period in history. The double-digit decline in revenue was primarily due to GlobalWafers' record high revenue in 2023, which set a challenging comparison base. Even amid a downturn in the semiconductor industry, factors such as customers' ongoing inventory adjustments, a significant increase in electricity costs in Taiwan, and higher depreciation expenses due to capacity expansion also impacted profitability.
Despite these challenges, GlobalWafers maintained a quarter-over-quarter growth trend in 2024, achieving consecutive growth for three quarters. For the full year of 2024, the gross profit margin was 31.6%, and the operating profit margin was 22.5%. Additionally, our profitability was affected by valuation changes in our holdings of Siltronic AG shares and the exchangeable units overseas exchangeable bonds issued based on these holdings. Leah will provide further details on the valuation logic later. Siltronic's stock price at the end of 2024 dropped nearly 50%, 50% compared to the end of 2023. At the end of 2023, Siltronic's stock price was around EUR 88, and at the end of 2024, it was EUR 46.5. So GlobalWafers had to recognize valuation losses despite the partial buffer provided by the exchangeable unit. However, this is purely an accounting loss and does not impact our GlobalWafers' actual cash flow operation or core profitability.
If excluding the valuation impacts, GlobalWafers' EBITDA for 2024 would be 36% with an EPS of 28.97 per share, demonstrating solid core profitability in line with historical records. Let me move to prepayment. As of the end of 2024, our prepayment balance stood at NT 31.9 billion, or around $1 billion, reflecting a 3.5% decrease compared to the previous quarter. Driven by the ever-changing global landscape, GlobalWafers, with its global presence and local supply edge, has gained increased recognition from customers, many of whom have proactively approached us to discuss new supply agreements. GlobalWafers is highly favored by customers due to several reasons. Number one, localized production, strengthening supply chain resilience while reducing exposure to global uncertainties, carbon footprint, and associated costs. And the second strength is potential mitigation of tariff and freight costs.
Domestic production helps minimize potential tariff burdens and logistic expenses, ensuring a most cost-effective supply chain. And the third strength is our proximity to customers, facilitating seamless collaboration in the same language, same time zone, enabling more efficient discussions on next-generation technology with our customers. So these strengths most position GlobalWafers as one of the best supply chain partners for many of our customers who are seeking to navigate an evolving landscape of market fluctuations, trade policies, and tariff challenges. We are very excited to share a major milestone in Q1 2025. We have signed a new long-term agreement in Q1 2025. The willingness of our partners to further strengthen collaborations at this moment serves as a strong testament to the correctness of GlobalWafers' strategic direction and reinforces our position as the preferred partner for customers navigating an increasingly volatile global environment.
While we continue to strike a balance between capital expenditures for strengthening our core competitiveness and returning value to our shareholders, GlobalWafers is committed to a stable and shareholder-friendly dividend policy. In principle, we distribute at least 50% of our after-tax earnings each year after setting aside the legally required reserve as stipulated in our article of cooperation. For the first half of 2024, a dividend of TWD 5 per share has already been distributed, and for the second half of the year, TWD 6 per share dividend will be issued, bringing the total annual dividend to TWD 11 per share. The 2024 dividend payout ratio stands at 52.2%, which is higher than the peer's average. Okay, next, let me share some of our view of the global economy.
While global GDP growth is projected to remain steady, it faces challenges stemming from policies on national subsidies, trade tariffs, and fluctuations in exchange and interest rates. The U.S. economy continues to show resilience, characterized by a robust labor market. As the economy recovers, consumer demand is expected to increase. Semiconductor. Let me share some of our view of the semiconductor market outlook. In the first half of 2025, semiconductor markets expected to continue facing inventory adjustments and tariff uncertainties. However, as inventory levels normalize and the trade environment stabilizes, the recovery trend will become more evident in the second half of the year. That's our view. Additionally, many of our customers agree with this kind of forecast. Additionally, the rise of affordable AI models is expected to drive the adoption of AI-enabled devices, leading to increased demand.
The evolution of advanced packaging technology from 2D to 3D will further boost wafer consumption, while emerging innovations such as robots are also anticipated to expand market demand. In 2022, GlobalWafers announced a TWD 100 billion investment for global capacity expansion. Most brownfield expansions are complete, with our new 12-inch heavy wafer production lines in Japan and Taiwan running at full capacity, achieving record high output. Our flagship U.S. greenfield project, GWA, is progressing very well and has entered the sample production phase, enhancing domestic wafer manufacturing. Next, I would like to share some new technology, new market. This time, I'm going to specifically discuss something about silicon photonics. Silicon photonics is rapidly advancing across sectors like high-performance computing, AI, cloud, cloud infrastructure, autonomous driving, precision medicine, and 5G, 6G communications, driving a smarter, faster, and more energy-efficient future.
GlobalWafers is unique in offering not only silicon, but also SOI wafers and even compound materials, enabling broader application support and unmatched flexibility. Our Missouri fab is the only U.S. facility producing 12-inch SOI wafers, and with backing from the CHIPS Act, we are expanding production with ramp-up expected in 2025. Leveraging another group company, AWSC's GaAs, gallium arsenide for optical components, we provide a comprehensive supply chain solution in silicon photonics. Our global footprint is crucial to maintain a competitive edge in the evolving semiconductor industry. With ongoing impact from tariffs, interest rates, exchange rates, and geopolitical risks, our manufacturing hubs across the U.S., Europe, and Asia ensure a secure and flexible supply chain. This localized production strategy mitigates tariff risk and reduces carbon footprint by shortening transportation distances, making GlobalWafers the most resilient company in an increasingly fragmented world trade.
Our TWD 100 billion CapEx for the advanced and special products may increase short-term spending, depreciation, and debt ratio, but this investment is essential for enhancing our core competitiveness. In both the current and future market, advanced nodes will continue to drive growth. With our entire expansion dedicated to this area, strengthening our ability to meet global demand and solidify our long-term competitive advantages. By combining localized production with a focus on advanced technology, we establish a unique moat that strengthens GlobalWafers' unique position in a dynamic global market. Next, I will move to, I'll move on to Sino-American SAS. Okay, so if you have our material, you can turn to SAS presentation material. In 2024, Taiwan's renewable energy industry faced multiple challenges. It was not an easy year. 2024 was difficult for renewable energy in Taiwan.
We faced multiple challenges, including project development delays and intense price competition from overseas markets. In response, SAS has strategically adjusted its direction, reducing its manufacturing proportion while augmenting downstream power plant operations and green energy sales to seize the growth demand for renewable energy from corporate clients. Its green power retailer subsidiary, SES Sustainable Energy Solution, has leveraged SAS Group's expertise in renewable energy, strong financial foundation, and broad semiconductor customer network to ensure long-term agreements with multiple enterprises. As a result, SES 2024 revenue significantly exceeded our original plan, positioning it as a key growth catalyst. Furthermore, SAS continues to identify hidden champions, effectively utilizing global resources and sales channels to maximize group synergies. In 2024, SAS-affiliated companies all delivered outstanding performance, contributing remarkable results and injecting new growth momentum into the group.
To ensure stable growth in an ever-changing industry landscape, SAS remains committed to advancing a high-value light assets business model, while evolving as an iconic conglomerate to embrace more promising companies to enlarge group synergy. These initiatives have already begun to yield tangible results, which will be further detailed in the following sections. First, let me present SAS consolidated financial performance for 2024. SAS consolidated revenue totaled TWD 79.7 billion, marking the third highest revenue in history. Gross margin growth profit margin was 30.5%. Operating income margin stood at 20.2%. Net profit margin was 14.6%. EPS, SAS's EPS amounted to TWD 9.24 per share. Similar to GlobalWafers, SAS net profit margin and EPS were impacted by mark-to-market valuation changes on its holdings of Siltronic AG shares and the exchangeable units issued based on the holdings.
If excluding this factor, SAS suggested net profit margin would be close to 20% and adjusted EPS would reach around 12.29. In the second half of 2024, SAS distributed a cash dividend of 3.5 NT per share, including 3 NT per share already paid in the first half, and the total dividend for 2024 amounts to 6.5 NT per share, resulting in a payout ratio of an impressive 70%. Okay, let me share some global renewable energy industry's outlook. Global investment in clean tech energy is accelerating, with projections indicating that by 2025, it will surpass upstream oil and gas expenditures for the first time, reaching a total of $670 billion. This milestone underscores the critical importance of renewable energy. Key growth drivers include solar, wind power, and Battery Energy Storage System, or BESS, which improve grid stability.
While government policies on clean energy may fluctuate, the primary driving force behind renewable energy adoption comes from corporations' ESG commitments and their long-term sustainability goals. Based on our discussions with our key clients, this trend remains exceptionally strong and unchanged. Let's take a look at Taiwan's renewable energy industry outlook. As mentioned earlier, Taiwan's renewable energy market faced significant challenges in 2024. However, its importance has now extended beyond economic considerations to national security concerns. We are pleased to see that the government has recognized this issue. On January 23rd, 2025, Taiwan government introduced more proactive policies, including simplified coordination between public sectors, which is expected to accelerate project approvals. Additionally, the increasing budget allocation will further strengthen renewable energy infrastructure and momentum.
We anticipate that these measures will start to take effect in the second half of the year, driving sequential revenue growth for SAS. As for 2024, renewable energy accounts for 11.6% of Taiwan's total electricity generation, 11.6%, with solar power contributing more than two-thirds of this share. To achieve the 2030 target of 31.2 gigawatts of solar capacity and 10.9 gigawatts of wind capacity, an annual addition of 2.82 gigawatts of solar and 1.17 gigawatts of wind will be required, setting a clear growth trajectory for both sectors. Furthermore, SAS forecasts that, driven by ESG commitments, the RE initiative and Taiwan's heavy electricity user costs, corporate demand for green energy will grow at 21.3% CAGR from 2024 to 2035, creating significant growth opportunities. With strong policy support and increasing corporate demand, SAS will establish a presence in the green energy sales market.
It's expected to continue expanding under this structural momentum. SAS is a diversified group with a broad portfolio across semiconductor, automotive, electronics, and renewable energy sectors. Through strategic investments and identifying high-potential business, it has built a competitive and balanced portfolio. As digitalization and energy transformation progress, electric power and computing power are essential to infrastructure and national security. SAS and GWC's products and strategies align with these needs, positioning both companies as key enablers of the sustainable and secure future. SAS leveraged global expansions and strategic alliances to build a competitive semiconductor ecosystem. As demand for advanced process wafers grows with AI, HPC, and EV, and GlobalWafers is expanding its advanced process capacity and strengthening its local supply chain, reinforcing this competitive edge. SAS is committed to sustainable development, evolving from a manufacturer to a one-stop renewable energy solution provider.
As global corporations prioritize energy transition, SAS is expanding its diversified renewable energy portfolio, enhancing market competitiveness and strengthening the green supply chain. SAS adheres to a strategic approach of synergy and collaboration within the group, fostering a complementary growth and expansion across key business sectors. This not only broadens its business scope but also drives the sustained growth of SAS and its affiliated companies. CW Lee. Later on will further explain their outstanding performance. Okay, let me move to the dividend policy. One of SAS's distinguishing features is above-industry average dividend payout ratio, contingent on earnings. Since 2020, its average payout ratio has been 66%, significantly higher than the five-year industry average of 30.6% for the solar sector and 42% of the semiconductor sector, with a dividend yield rate of 5%. SAS demonstrates its commitment to delivering lucrative returns to shareholders, reflecting strong financial performance and its focus on long-term value.
This further highlights the company's undervaluation in the market. Yes, I was talking about undervaluation. SAS stock price was undervalued. SAS has, if you have SAS presentation material, please turn to page 15. We have a chart, our market cap chart analysis right over there on page 15. SAS has consistently pursued diversified expansion and strategic alliances, strengthening its competitive edge in the semiconductor and also renewable energy sectors. These efforts have enhanced its market position, created long-term value, and fostered greater synergy. However, the market has not fully reflected SAS's growth potential. Based on the stock price as of February end, summing the market capitalization of its affiliates and weighted by SAS ownership percentage, SAS market value should reach TWD 105 billion, with a stock price of TWD 163.6. This represents a 23% discount to its current price, indicating a clear undervaluation.
Furthermore, considering GlobalWafers' regional supply chain, reduced carbon footprint, and the substantial increase in the proportion of advanced process and specialty products, the most needed in the volatile world. The current stock price does not yet fully capture its core and unique competitive advantages. As the world continues to advance in cutting-edge process technologies and accelerate the energy transition, SAS and GlobalWafers' strategic positioning and strength in the renewable energy and semiconductor sectors will become even more prominent, further propelling the growth momentum across the group. Okay, that's all I wanted to make, all the summary, the comments I want to share with everyone. And next, Leah and CW will present our industry outlook and SAS 2024 operational performance and also address some key investors' concerns. Later on, thank you very much. Leah, please.
Thank you, Doris. I will quickly update GlobalWafers' recent development and answering questions we have received so far. First is about the AI-driven growth that propels semiconductor expansion. Research institutions have increased their 2030 market forecast from $1 trillion to $1.3 trillion, with 18 new fabs under construction this year, indicating strong demand for semiconductors. The result is a 6.6% worldwide growth rate. This leaves more room for further growth. Additionally, AI, high-performance computing, and data centers are driving significant demand, particularly for advanced wafers, where supply chains remain constrained. We anticipate wafer consumption will continue to rise in response to these trends. At GlobalWafers, our expansion locations are well aligned with downstream new fabs. You can see the graph on the right-hand side, ensuring that we meet growing demand across key regions.
Our localized production footprint positions us as a ready supplier for secure local supply to any potential tariff measures arise. Okay, next page. GlobalWafers' expansion strategy aligns with regional customers' growth as well as the industry's recovery, with new capacity ramping up to meet customers' new fab operational timelines. Most of our brownfield projects have already been completed and are actively contributing to revenue. Notably, our advanced 12-inch AP lines in Taiwan and Japan are fully loaded, achieving record high shipments for consecutive months. Looking ahead, larger-scale expansion in Europe and the U.S. for 12-inch silicon and SOI wafers will come online in 2025 and 2026, reinforcing production resilience and ensuring a stable wafer supply exactly when and where the market needs it. Additionally, our Texas GWA plant has reached the sample preparation and delivery phase, marking a key milestone in strengthening U.S. wafer supply chain.
The next page is about silicon photonics. Silicon photonics is transforming industries like computing, sensing, LiDAR, and communications with its low power consumption, high bandwidth, and scalability. It is key for AI, quantum computing, 5G, 6G, and biomedical applications, and it's set to drive further innovations. The market could exceed $50 billion by 2035, cementing its role in digital infrastructure. The next page will show GlobalWafers' opportunities in silicon photonics. As the sole supplier of both silicon wafers and the SOI materials, GlobalWafers plays a crucial role in this evolving ecosystem. Our Missouri fab in the U.S. is the only domestic SOI maker in America and is currently expanding its 12-inch SOI wafer production capacity and supported by the CHIPS Act. Furthermore, its relevant technology platform requires four silicon-based substrates, which means polished wafer, AP wafer, as well as SOI wafers.
Along with the certified compound materials for optical active components, we could leverage our affiliated company, AWSC's Gallium Arsenide products. GlobalWafers ensures an integrated and reliable supply chain for silicon photonics development. Next is our financial highlight. Our profitability in 2024 was mainly impacted by mark-to-market valuation changes on our holdings of Siltronic shares and the exchangeable units issued based on those holdings. GlobalWafers holds a 13.67% stake in Siltronic, classified as a financial asset. In accordance with IFRS standards, we recognize quarterly valuation gains or losses based on fluctuations in Siltronic's stock price. To enhance capital flexibility, we utilize 10.3% of our Siltronic holdings to issue EUR 345 million overseas exchangeable units in Q1 2024, followed by the remeasurement of these assets. Typically, changes in the value of Siltronic shares on the asset side can be partially offset by changes in the value of warrants on the liability side.
However, this offset is not linear and varies over time due to several influencing factors. In 2024, Siltronic's stock price dropped nearly 50%, which led GlobalWafers to recognize valuation losses. Also, the exchangeable units provide some buffering effect. Please note that these valuation changes represent only an accounting loss and do not impact our actual cash flow operations nor core profitability. Excluding the valuation impact, GlobalWafers' EBITDA margin for 2024 would be 36%. EPS would be 28.97%. ROE and ROA would be 16% and 8%, respectively, consistent with our track record. Now, I would like to hand you over to CW to highlight the key points regarding SAS.
Thank you, Leah. Next, this is CW. Next, let me introduce SAS company overview. Please turn to the next page. On this page, we currently have five major consolidated group companies. First one is GlobalWafers.
It's just explained by Doris and Leah, so I'll skip this one. Actron is a leading automotive electronics supplier and the global largest automotive LLD, low-loss diode, and ultra-low-loss diode supplier with over 50% and 70% market share, respectively. Next is AWSC. AWSC is the second largest semiconductor company with more than 20% market shares. Its power amplifiers are widely applied in satellite and cell phones. TSC is one of only four semiconductor-grade, high-purity dioxide mass-producing specialty chemicals used in semiconductor manufacturing processes. Following verification among customers in Taiwan and overseas, the business is expected to grow further. Lastly, SES provides renewable solutions to group companies and end customers' service. It partners with companies in the green energy transition and ESG trend by assisting with renewable solutions. As a strategic enabler, we embrace more promising companies to enlarge our ecosystem and are passionate in unveiling the hidden champions. Next page.
With further consolidation of group companies into SAS, total group companies' revenue share has grown from 0.2% in 2021 to 16.2% in 2024. It is also bringing sustainable growth to the SAS group as a whole. Next page, a premier renewable energy provider. On page 34, a premier renewable energy provider on the left-hand side. On the left-hand side, with leveraged power plants and semiconductor client networks from other group companies, SES enhances synergies and drives ESG initiatives. On the right-hand side, SES is Taiwan's first retailer to sign a corporate power purchase agreement, CPPA, with Copenhagen Infrastructure Partners, CIP, for offshore wind power. Secure 30-year agreements to supply solar and wind energy for customers.
With collaboration with Anue Energy, one of SAS group company, SAS adds Type III plants to its portfolio, enabling SES, previously focused on electronics and semiconductors with Type I plants, to expand its customer base to include services, telecommunications, and finance, delivering tailored clean energy solutions to a broader market. Next page. In 2024, a recent performance of key group companies. In 2024, group companies all delivered impressive operational results. Like Actron, revenue created four consecutive years' growth, reached record high, TWD 7.58 billion, a 34% worldwide growth. AWSC achieved second-highest record, hitting TWD 4.46 billion, around 64% worldwide growth. TSC, TWD 874 million, record high, 57.9% worldwide growth. GlobalWafers also achieved TWD 62.6 billion, third-highest record, after 2023, TWD 70.6 billion, highest record. The next page also is their performance. You can find EPS performance also super good, with 7.3%, 142%, and 531% worldwide growth, respectively. Next, let's move to industrial overview.
Please turn to page 38. Yeah, Global Clean Energy Investment Track. On the left-hand side, this page was explained by Doris earlier. On the left-hand side, showing total spending to reach $670 billion in 2025. Solar and wind power account roughly two-thirds of overall investment. Although some political shifts and policy changes may affect the market, in the long term, corporate demand remains very solid, driven by ESG commitment and the need of sustainable operations. Next page. On the left-hand side is Taiwan's renewable power generation capacity from 2021 to 2035. Its government goal is to generate electricity with renewable energy to 30% by 2030. In order to achieve 31.2 gigawatts solar power in 2030, annual installation with 2.8 gigawatts is required. We estimate total renewable energy demand growth forecasts a CAGR of 21.3% year 2035. Next, let's move to our 2024 financial result.
On the financial highlights page, on these two pages, 43-44, our Q4 and 2024 financial highlights. As Doris mentioned earlier, our Q4 revenue was NTD 20 billion, represented QoQ and the year-over-year decline of 0.8% and 5.6%. Total 2024 revenue is reached to NTD 79.7 billion, 2.8% year-over-year decline. EPS for Q4 was NTD 0.74 per share and NTD 9.24 per share for 2024. Decline NTD 7.75 year-over-year, mainly due to Siltronic's stock valuation loss. Q4 and 2024 EBITDA margin was at 17.2% and 28%. ROE was at 3.2% and 11.8%. ROA was at 1.7% and 5.03%, respectively. On the next is the summary, page 45-49. Summary trend for revenue, gross profit, operating income, net profit, and EPS. From this page, you can see 2024 revenue was, as mentioned earlier, NTD 79.7 billion. It's the third highest record, and net profit was NTD 11.6 billion.
It was around 14.6%, and adjusted amount was TWD 15.3 billion, 19.2%. Adjusted means excluded Siltronic's stock valuation loss. The total EPS of 2024 was TWD 9.24 per share, with adjusted EPS was TWD 12.29 per share. Next is income statement and balance sheet. So these two pages, you can find the cash and cash equivalent was TWD 54 billion. Some deposit in bank held for three months or more and restricted the cash need more and need to move to other asset item, which accounts TWD 9 billion around. Shareholder equity increased to TWD 115 billion versus TWD 82 billion in 2023. So above is my presentation. Next, let's move to Q&A.
Thank you, Lee-san. Now we will address both the questions we have received from investors recently and those we anticipate will be raised. Let's start with GlobalWafers. The first one is about outlook. Please share 2025 GlobalWafers business outlook.
In the first half of 2025, the semiconductor industry will continue to digest existing inventories, and the uncertainty surrounding tariffs have led customers to adopt a cautious wait-and-see approach. However, as market conditions become clearer in the second half, coupled with declining inventory levels, the recovery momentum is expected to strengthen. We have also observed several positive indicators. The first is local solutions. In anticipation of potential tariff hikes and freight, customers are eager to establish local solutions. The second one is cost-effective AI models, which are expected to drive market growth and demand for AI-edge devices. Next is advanced packaging technologies, which are likely to boost wafer consumption. Reflecting these trends, we have witnessed some rush orders, and customers are actively requesting local solution quotations from GlobalWafers' global facilities. We expect GlobalWafers' operation to grow in this year compared to 2024, with an even stronger increase projected for 2026.
The first quarter of 2025 is expected to be the lowest point of the year, followed by sequential quarterly improvement. Moreover, each quarter in 2025 is expected to surpass both the previous quarter and the corresponding quarter in 2024, resulting in consistent double-digit growth. The second one is the latest GWA status. First, construction and schedule-wise, we are on track for manufacturing test wafers according to plan and are on track to meet our goal of delivering commercial wafers within the first half of 2025. Regarding CHIPS and subsidies, following the signing of the final agreement with the U.S. Department of Commerce last December, we will receive up to $400 million direct funding. After fulfilling the initial milestone commitment within the next four months, GWA could qualify for its first direct grant payment in the second half of 2025, based on our estimate.
The next is 25% AMIC tax credit. We are eligible for the U.S. Treasury Department's Advanced Manufacturing Investment Tax Credit, which provides up to 25% of qualified expenditures at our GWA and MEMC LLC facilities. We plan to file our tax return in the second half of 2025 and expect to get refunded in due course. Review times may be extended as this is a whole new program with large amounts. We will continue the process. In our viewpoint, it seems that GlobalWafers America and MEMC will come online at just the right time. The global industry is finally picking up, and the wafer inventories held by our customers are diminishing.
We are expecting an uptick in demand for GWA's made in the U.S.A wafers over the next several years, combined with the continued national emphasis on revitalizing manufacturing to secure the supply chains and the emerging importance of local solutions. GWA will remain solid and sound. The next question is about the CHIPS Act. Will the new U.S. administration continue supporting the CHIPS Act, and have there been any notifications or changes regarding this? Actually, the idea of the CHIPS Act began during the first Trump administration to bring semiconductor manufacturing back to the U.S., and Congress and the Biden administration continued the bipartisan support, making it a law in 2022. The CHIPS Act aims to strengthen U.S. semiconductor manufacturing, and our expansion plays a crucial role in securing domestic wafer substrate supply and reinforcing the industry resilience.
We continue close cooperation with the CHIPS Program Office, called the CPO, and expect to meet our first half 2025 milestone, and we plan to apply for the payment and expect to receive it in the latter half this year. There's no change to the schedule as of now. We are proceeding with sample deliveries, equipment installations, and production ramp-up as planned. We appreciate the U.S. government's CHIPS Act support, which enables us to grow and strengthen the U.S. semiconductor ecosystem. A stable policy environment will help align our efforts with market needs as we continue expanding in response to customer commitments and LTAs. We look forward to working with the new administration to enhance U.S. semiconductor manufacturing. The next is about the tariff. President Trump clearly communicated his intent to implement a fair and reciprocal trade and tariff policy in April.
What impact will this have on GlobalWafers and the supply chain? Our answer is that it is still uncertain what this proposal would be and what it will mean for wafers, as there is very limited supply of wafers directly from Taiwan to the U.S., and it remains unclear whether wafers will be included in the tariff or not. Given GlobalWafers' very strong regionalization strategy, including the building of GWA in Texas and MEMC in Missouri, we believe our company is well positioned to weather any changes to the U.S. tariff structure for semiconductors. Now we are completing phase one and commencing building of phase two. In other words, we have the best insurance policy in place to preserve and substantially grow U.S. market share, regardless of how tariffs are adjusted. The next one is about our gross margin expectations.
Our gross margin has been impacted by several factors, including the rising power cost, depreciation from capital expenditures, and the fixed cost tied to unused capacity. However, we see opportunities for the improvement. The power costs have risen by 75% in Taiwan in the past three years, and the spike in Europe due to the Ukraine war. Recently, the European prices have stabilized, and our U.S. operation benefits from the lowest power cost. As U.S. production ramps up and if the Ukraine war stops, we expect this positive effect will dilute our overall power cost structure. The next factor that influences our gross margin is depreciation. Our U.S. expansion received $4 million cash grant, reducing capital expenditures and enhanced gross margin. Similarly, government subsidies in the U.S. and Italy will cover 35% and 25% of total investments, respectively.
The next factor that will influence our gross margin is unused capacity. We anticipate that as the industry recovers, we expect better utilization rates, and it will reduce unused capacity costs. In summary, while power costs and depreciation from expansion have pressured our gross margin, our strategic expansion is crucial for long-term growth. Short-term margin may be under pressure due to low utilization. This is a temporary effect of the macroeconomic environment, not poor decision. Regarding the future guidance, in 2025, as new facilities ramp up production, we anticipate some pressure on maintaining gross margin due to increased depreciation. We anticipate some pressure on maintaining a similar gross margin level with 2024 due to increased depreciation uncertainty in electricity costs.
We already confirmed that Taiwan power costs will continue to hike, but the European power costs may fluctuate due to there's possibility of the end of the Ukraine war and the potential tariff adjustments, because if there is any additional tariffs imposed, raw material we use may also be affected, and this will impact the final price. Given these uncertainties, it is currently difficult to provide a precise estimate. However, as government subsidies are recognized and advance the process expand in our production, we expect a gradual improvement in our gross margin. The next question is about Siltronic shares. Even if there is no cash outflow, Siltronic's depressed share price has a significant impact on GlobalWafers' income statement. Does the company have any plan?
Siltronic shares are treated with mark-to-market accounting, meaning value changes only affect book profit and result in unrealized losses, with no impact on our cash flow. While stock price fluctuation may affect financial statements, they don't affect actual cash outflow. Our core business remains strong. We have a positive outlook on the long-term development of the semiconductor industry and are confident in its continued growth. Siltronic is an excellent company and a competitor, and its current stock price doesn't reflect its true value. As always, we continue to evaluate the best capital allocation strategy for the group. The next is about GlobalWafers' SiC strategy. What is our current process and layout in compound semiconductors? We are actively developing the compound semiconductor portfolio with a clear focus on SiC and gallium nitride, each offering distinctive advantages from modern technology applications.
SiC is renowned for its ability to handle high power, high voltage, and making it the material of choice for applications such as EV, high-power converters, and renewable energy systems. There is no doubt that SiC is the right product for the technology innovation. Also, GlobalWafers originally anticipated three-fold revenue growth in its SiC business in 2024. The actual growth has been limited to only tens of percentage points due to a significant drop in its average selling price in the market. This decline was primarily driven by steep price reduction starting from the end of 2023. Currently, 6-inch SiC wafer prices have stabilized but have not yet rebounded. Despite the weak automotive market, customers are proactively validating 8-inch products, with 2025 identified as a critical certification period.
Now we are committed to advancing 8-inch SiC wafer mass production and positioning ourselves as the most cost-effective supplier outside of the Chinese supply chain. Additionally, since the U.S. Section 301 investigation includes SiC, we anticipate a fairer competitive environment that will allow only robust companies to prevail. The next is about our gallium nitride. Our GaN products continue to perform strongly, with four-year orders consistently at full capacity in 2025. GlobalWafers focuses on gallium nitride and SiC technology, which is widely used in power devices, 5G base stations, and fast charging systems for EV. As the price declines, the applications for GaN are expanding, and the market acceptance continues to grow. Looking ahead, with the evolution of high-frequency applications, silicon photonics, and the overall market share of compound semiconductors is expected to increase steadily, then I will give the floor to CW for SAS.
Okay, thank you, Leah.
The question for SAS, some questions already we have explained in the previous presentation, but let me briefly explain. The first question is about the Trump policy is not supporting green energy. What will be the impact to the renewable energy industry? As I mentioned, while political shifts the policy, the change may affect the renewable energy, but the best basically the demands come from corporate demand. So the corporate demand remains very solid and also driven by ESG commitment and the need for sustainable operation. So there's no change for the renewable energy demand, no change. Still very strong. Next question is about 2025 Taiwan solar market outlook. Of course, the government policy is also very important as we explained on page 22. By 2024, Taiwan has already installed 21.1 gigawatts of renewable energy capacity with solar. Solar PV is around contributing around 68%, around 14.3 gigawatts.
But in order to achieve the target to 31.2 gigawatts by 2030, still we need to install at least 2.82 gigawatts annually. This is the current situation. Next question is about the dividend policy for SAS and GWC. I think Doris already explained very clearly. SAS Group is aiming high payout ratio in return to long-term shareholders. And based on 2024, the SAS payout ratio reached 70%. Dividend yield was 5.16% based on February 27 closing stock price. If you check the past record, the dividend payout ratio is even higher than 70%. Okay, that is very simple of my SAS question. So let's move to the next section.
Okay, above is our response to the questions. Now I would like to turn it over to Doris for the Q&A session.
Please type your questions in the chat panel or ask questions verbally toward the end of the earnings call.
Okay, thank you. Thank you, Leah and C.W. Now let me answer some of the questions we just received from Slido. The first question is from Stanley. If the company doesn't receive CHIPS Act subsidies, how long do you expect the new U.S. plant to break even? That's definitely a very important question. There are still a lot of uncertainties out there, including like what I said, the tariff and the product mix in the U.S. and the price, the average selling price, because we expect that if there are tariffs for all the supply chain, I think it's very likely that the material cost will be higher, the selling price will be higher as well. So there are a lot of uncertainties.
Currency and interest rates are still uncertain as well. So it's very hard to predict that, hard to estimate that when the U.S. plant will reach break-even point without CHIPS Act subsidy. But I think that there are still a lot of opportunities out there, including that we will have higher loading than the utilization rate maybe will be higher than without tariff. So I think that there are a lot of potential opportunities to improve. So for now, what we can say is that I think if there was no CHIPS Act fund, then definitely our payback time or the break-even time, it will take a little bit longer. But it's still very hard to predict how much longer that will be. There are still a lot of opportunities to improve. The second question is that what is the current production capacity?
What is the current production capacity and status of GlobalWafers' silicon carbide substrate? Additionally, could you provide details on Actron's acquisition plan for the 8-inch wafer fab? I have no comment for Actron's 8-inch wafer fab plan. For silicon carbide, for silicon carbide, GlobalWafers' silicon carbide substrate, we are our main shipment volume is still for 6-inch silicon carbide, but the new samples, new qualification samples are basically focused on 8-inch right now. So right now, the price is stabilizing, and especially silicon carbide is silicon carbide also will incur some tax extra tax or tariff as well. So that means the price, the global market price is stabilizing, but the demand is still because of high inventory in the supply chain. Silicon carbide total demand right now is still weak.
Part of the reason is inventory, and another reason is that EV business is still pretty weak right now. So demand is weak, but our capacity remains, and we have expansion plan for 8-inch capacity, capability, and capacity that also we keep the whole plan ongoing as well. We keep moving on our technology improvement cost reduction plan and also 8-inch overall capability improvement. All of these are still ongoing as plan. Okay, so that's the next one. Next one. Next one is Stanley is what's the idle cost in 4Q24? We will share with you by email. I don't have the number with me. And next is that please give advice on SG&A, OPEX, and OP for the following three years. Sorry, we don't disclose these details for the near future. So we don't disclose the details. And next is from Luca.
How does GlobalWafers' view of technological and market impact of DeepSeek on major AI companies such as NVIDIA, Microsoft, Google, and TSMC? What effect do you anticipate this development will have on GlobalWafers? I think in general, DeepSeek makes AI more affordable than before. So in the past, in the past two or 18 months, AI definitely was super hot, but that's mainly for big companies. But now because of the affordability of AI, I think more and more smaller scale business or a little bit smaller scale applications will be able to afford AI. So we believe that an affordable solution and affordable AI solution definitely will grow edge computing and more and more AI-enabled devices will be launched to the market. So I think it's positive for all AI supply chain companies. That's our view. Okay, and next is from James.
If it is possible to obtain the presentation file from this meeting, I think
We have already uploaded to the web system as well as GlobalWafers and SAS company website. So please feel free to visit our website and download the files.
Okay, thank you, Leah. Next is Felix Lee. After TSMC announced a $100 billion investment, how does GlobalWafers view the prospects of further expansion to GW or greenfield sites? That's a very good question. I think first of all, if the local demand increases in the U.S., that's definitely good for no matter which company as long as the whole local demand in the U.S. is stronger, then we as the key supplier, I think we definitely have to prepare ourselves to be able to supply our customers' demand. So that's definitely good news for us.
But are we going to expand, make further expansion to GW or the Greenfield sites? I think that depends. I think there are still a lot of uncertainties, including the tariff and how the tariff played the role for the overall global trading policy. And I think there are a lot of uncertainties. We need to know, of course, we need to know our GW cost competitiveness because we are in the sample production phase right now. So when we move, when we start ramping up for mass production, I will have a much better idea about the cost competitiveness of our GW operation.
So if we have strong demand in the U.S. and we have a strong cost competitive operation in Texas and Missouri, then and also our U.S. customers are willing to have a long-term commitment to us, then we definitely will be very willing to make further expansion. But that depends on our business performance. That's very important and also depends on the overall market demand in the U.S. So that's our answer to this question. That's a very important question, and we will keep monitoring this. Okay, next question is for outlook of TSC. Does the demand outlook require capacity expansion? If it does, what's the firm's expansion plan for the next two years? What margin can be achieved when fully utilized? That's a very important question as well. I think we have very good capacity. TSC has good capacity.
So if the market, if the demand keeps growing, then in the next two years, maybe we'll do a little bit debottlenecking here and there, but that's not a huge CapEx. But what's more important than the expansion or debottlenecking is that we will try to launch our new chemical as our original plan every year. So that's for those new products, we'll need some new CapEx. That's the plan. So basically, I think we'll be very cautious monitoring our overall performance and technology readiness to decide our expansion plan. So basically, I think we'll be very cautious and we'll keep growing. Okay. Next question is our utilization rate for 6-inch, 8-inch, and 12-inch in 4Q last year. Outlook for first Q 2025.
First of all, Q1 this year, Q1 this year's overall utilization rate is lower than Q4 last year. Q4 last year was the highest quarter of 2024. Utilization-wise, Q4 last year was much better and 12-inch utilization rate was pretty okay, especially EPI, 12-inch EPIs, the loading was okay, utilization was okay. 8-inch was lower than 12-inch and 6-inch was even lower than 8-inch. That's the status. Q1 2025 is supposed to be the lowest point of 2025. Q1 2025 will be lower than Q4 2024. That's current status. Q125 will be higher than Q1 2024. That's our view. Okay, next question is we also have questions regarding SES operation status and outlook. SES, which is Sustainable Energy Solution, it's a renewable energy electricity supply company. We sell the products, not tangible module or cell. It's renewable energy. It's doing very good.
This year, we are expecting to have several times revenue-wise, several times higher than YOY. It will be much higher than last year. And we're doing okay. And you might know that we signed, and also CW covered this part as well. We signed a 30-year power supply with CIP Copenhagen Infrastructure Partners, got the wind power 30 years. And we also announced that we have signed some long-term 30 years, 20 years, 30 years power supply agreement with some semiconductor, very good semiconductor companies in Taiwan. So we're doing okay. And I believe that 2025 SES will have several times growth as well. Okay, next is Jack. Does 2025 GWC guidance of gross margin under pressure already consider likely subsidies received in second half 2025? It's not. I think what we said is just a guideline.
So we really didn't factor in that how much when we're going to receive. So if we receive the subsidy as anticipated, I think our gross margin performance will be better than our outlook. Okay, and next one is that please advise SAS solution to the past four financial performance with CAGR.
So this hypothesis is still true?
Yeah, when we talk about CAGR, that's a macro market CAGR. It's not SAS CAGR. I think market, especially when we talk about CAGR, we're talking about the market size and revenue growth instead of the margin or performance. And so the global renewable energy demand, according to the forecast and government policy, the CAGR for renewable energy demand is very high, but that doesn't mean that Taiwan itself will immediately grow that much. And another point is that the market price is a little bit different.
So I think maybe I didn't make myself clear enough. When we say CAGR, we mean that the market outlook, not SAS solar cell or solar modules CAGR. If you need more details, please feel free to reach out to our spokesperson, Leah or C.W. Okay, and next is the next question is about renewable energy business update. And I think we have already covered this one. Okay, from Sunny, could you share some color on the gross margin dilution from the USGF FAB?
Sunny, do you mean GlobalFoundries or
GlobalWafers?
Because our FAB is called GWA. Sunny, we were going to unmute you, so please accept our invitation to unmute. Could you raise your hand so we can look at you more quickly?
Okay, let's move to the next question [audio distortion]. Does your 8-inch FAB have any plans for production cuts? No, we don't have any plan.
I think we're talking about silicon, 8-inch silicon fab. No, we don't have any plan to cut the production. We have some special project applications, and you might know that we have very good Float-Z one business as well. And the main Float-Z one business is 8-inch. So actually, our 8-inch, I think we are expecting to see some growth for 8-inch Float-Z one as well. So no, we have no plan for production capacity cut. Next is that please indicate if SAS plan to expand operation into India market. Not today. Not today. Of course, we're open. We keep monitoring the growth potential, the business opportunity in every region, but we don't have any solid plan for the expansion in India yet. Okay, so you're in GF, you're in Greenfield. Thank you, Sunny. I got you. Okay, back to Sunny's question.
This one, so Sunny is asking, could you share some color on the gross margin dilution from the U.S. Greenfield fab? 2025.
Okay.
How much will depreciation increase this year? And on the product ramp of U.S. new fab, have you been qualified to supply to TSMC's 4-nanometer fab in Arizona?
Okay, thank you, Sunny, for this question. We haven't been qualified by, I mean, GWA haven't been qualified by TSMC's 4-nanometer fab yet because we are in the sample preparation stage now, and it takes a couple of quarters to get qualification. So we're working on the sample production right now. Depreciation increase, we don't have a specific number today, especially if we are talking about GlobalFoundries, Greenfield. 2024 Greenfield depreciation actually is still low, GWA, because we're still under construction. Last year, we were still working on the construction and tooling, but we're evaluating.
We haven't passed the final acceptance yet in 2024. So the depreciation from Greenfield fab last year was relatively low. But starting from 2025, when we finish the hookup, the installation, and final acceptance, final acceptance confirmation of each tool, then we will start seeing more and more depreciation.
Okay, then we will take the last questions on the tax questions. So that will be Stanley's. Could you please share your view on supply and demand dynamic in 2026 and beyond?
Yes, I think for, I guess you were talking about semiconductor.
Semiconductor 2026, our forecast and many of our customers, many of our customers' view is that 2026 will be a much stronger, the overall will be a much better year than 2025 because of a lot of potential political or any regulation, real tariff uncertainties will be settled, will be confirmed, and also inventory level will be normalized, much better, normalized, much better than what we are seeing today. And also we expect that the interest rate maybe will be normalized as well. So I think our forecast is that 2026 will be a much better year than 2025. Although 2025, we still expect that GlobalWafers will grow as well in 2025. That's our forecast.
Okay, thank you, ladies and gentlemen. The floor is now open for live questions. If you have any queries, simply use the raise hand feature.
Once acknowledged, please be ready to accept the host invitation to unmute your microphone and share your thoughts with us. Okay, the first one will be Sunny. Sunny, we are going to unmute you, so please accept our invitation for unmute.
Hi, Doris. Leah, could you hear me okay?
Yes. Hey, good afternoon, Sunny.
Hi. Thank you for answering my prior question on the Greenfield expansion, on the gross margin impact for the. Sure. Also, my other question is on the pricing. And so has spot price for 12-inch stabilized into 2025, or is it still declining? And at this point, roughly, what's the gap between spot and LTA pricing for 12-inch?
I think the concern out there is if the gap is still there and even widening, would there be any risk that the customer will want to renegotiate on the contract pricing, especially with the imbalance for the industry supply demand?
Thank you, Sunny. That's a very important question, and it changed quarter by quarter. Right now, I think our LTA contract price is mainly for advanced nodes. So in spot price, it's mainly for the mature nodes or legacy products. So obviously, the spot price is still stabilizing, but it's not really 100% stabilized yet. It's stabilizing. And I think, as I said, that Q1 is the weakest, the lowest quarter in this year. So right now, it's still not the best time to comment that is the spot price stabilized yet or not.
But I think that starting from Q2, spot price will be much stable than Q1. And another reason is not only because starting from Q2, we'll see a stronger demand than Q1. Not only this, but also that if the tariff is implemented, then I think the spot price, it will be more complicated for spot price because if your spot wafers are shipped from a country with a little bit higher tariff, then actually the price will, the price gap will be narrower than what we are seeing today. That's our view. But for advanced node, I think price is pretty stable. It's okay. Basically, there's not many spot supply, spot market for advanced products. For advanced products, which is the main driver for the growth in the market right now, the price is pretty stable. No matter it's GlobalWafers or the other market, the other players.
Yes, I hope I answered this clear.
Thank you, Sunny.
Yeah.
Do you have a follow-up question?
That's helpful. Yeah, may I have a—
Sunny, we cannot hear you clearly because you're breaking up.
A quick second one.
We think you are breaking up.
On the CHIPS Act subsidy, what's the specific milestone?
Right.
Let me try again. So on the US subsidy, what's the specific milestone you need to achieve for you to get the first batch of subsidy in the second half of the year?
We have several milestones, but we sign because our policy is that if CHIPS project office didn't disclose, then we don't disclose. But it's very—I can tell you, Sunny, that the milestones are very specific, very clear for us, and we are about to achieve, to reach the milestone one.
But I apologize, I cannot disclose what specific milestone one is.
Sure. No problem. Thank you.
Thank you very much, Sunny. Thank you.
This one will go to. I saw that IBL just raised your hand. So do you have any questions?
So we lost IBL, right?
Oh, yeah, we lost IBL. Okay. So is there any questions for SAS and GlobalWafers? If there is no more voice questions.
Okay. Thank you so much. If no more questions, then we'll conclude the meeting here. Thank you again for spending your time with us. And thank you very much. And if you need further details or if there are any points I didn't make it clear enough, please feel free to reach out to Leah and C.W by email. Thank you so much and have a great day. Thank you.