X-fab looks to billion dollar year
The latest figures for X-fab highlight the strength of niche process technologies in Europe as the company heads for its first billion dollar year next year.
X-fab is benefitting form its strong automotive customer base and the long term agreements they have for capacity, mostly for sensors.
The company saw revenue of $233.8m in Q3, up 24% year-on-year and 3% on the previous quarter. IT is forecasting similar revenue of $230m to $245m, which at the low end would see the company with revenue of $899 for 2023. This is up from 20% $739.5m in 2022 and $650m in 2021 and puts the company on track for its first billion dollar year in 2024.
This comes from strong growth in X-Fab’s key end markets – automotive, industrial, and medical up 31% YoY, with all-time high Microsystems (MEMS) revenues, up 33% YoY.
Demand in X-Fab’s key end markets remained strong and capacity continues to be constrained. The company is expanding all its fabs but the lead times even on 200mm and 150mm process equipment is holding back the growth this year, says CEO Rudi de Winter.
Third quarter bookings were $208.2m, a decrease of 4% year-on-year and 6% quarter-on-quarter, but the order intake does not fully reflect the demand says de Winter. This is mainly related to X-Fab’s long-term agreements (LTAs) with major customers. The quantities under these contracts are not included in the bookings. Due to X-FAB’s high backlog, which amounted to $483.7m at the end of the third quarter, LTA customers prefer not to place orders too far in advance while having secured their capacity via LTA.
The automotive business continued to grow strongly, recording revenue of $135.3m, up 40% year on year, primarily driven by the production ramp of the 180nm automotive process at X-Fab France. The fab is shifting from its roots with ???, with 91% of the revenues generated by the French site now based on X-Fab technologies, compared to 56% in the third quarter last year.
The company has been aiming to move more into industrial and medical markets.
Industrial revenue was $53.7m, up 15% year-on-year. The shift towards clean energy sources like wind and solar is driving growth of X-Fab’s silicon carbide business out of Lubbock, Texas, while X‑FAB’s expertise in sensing and actuating is key to applications supporting major trends such as factory automation as well as smart cities and buildings.
Third quarter SiC revenue was $18.6m, up 7% year-on-year, whereas SiC wafer shipments went up 38% year-on-year. The stronger increase in wafer shipments is not reflected in the top line due to a higher portion of customers that source their own SiC raw wafers and consign them to X‑Fab. As the value added by X-Fab remains unaffected, this results in a lower total billing but higher profitability.
In the third quarter, medical revenue as $17.0m, up 26% year-on-year, primarily driven by a DNA sequencing application using a MEMS micromachined device. This enables the miniaturization of large diagnostic equipment to handheld or tabletop size.
The Microsystems business also set a new revenue record of $24.4m, up 33% year-on-year, demonstrating that the realignment of this business unit towards system integration is gaining traction.
There is continued strong demand particularly for X-Fab’s 200mm CMOS, silicon carbide and MEMS technologies, while supply and demand for X-FAB’s 150mm CMOS technologies is meanwhile well balanced.
Although lead times for the new equipment for capacity expansion are still long, all projects are on schedule says de Winter.
“The third quarter was characterized by strong revenue growth in X-FAB’s key end markets, with our automotive business again leading the way with a 40% year-on-year increase,” he said. “The successful transformation of our business keeps contributing to increasing profitability, driven by economies of scale and a favourable product mix. A highlight of the third quarter was the record sales in our Microsystems business.”
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