Soitec S.A.

Soitec reported H1 FY2026 revenue of EUR 231 million, down 29% organic year over year. EBITDA margin was 34.1%, with gross margin down 490 bps year over year, and net result was minus EUR 67 million; excluding nonrecurring items, current net income was broadly stable at minus EUR 2 million. Operating cash flow was EUR 26 million and free cash flow was minus EUR 31 million under the updated definition. For segment highlights, Edge and Cloud AI revenue was EUR 96 million, flattish organic year over year, but up 34% excluding the anticipated Imager-SOI phaseout. For the next quarter, management expects Q3 FY2026 organic revenue growth in the mid- to high single-digit range sequentially. For FY2026, CapEx is expected at around EUR 140 million, down from the previously indicated EUR 150 million and below the EUR 230 million spent in FY2025. Management also said H2 gross margin will face headwinds from lower fab loading, mix/price, FX and lower volumes, and that a 10% decline in fab loading has a 300 bps negative impact on gross margin.

Pierre Barnabé framed FY2026 as a transition year focused on cash, inventory correction and organizational simplification. He said the company is being methodical and sequential, reducing production to bring inventories down while maintaining selective investment in strategic growth areas like AI-related markets, photonics and FD-SOI. His tone was pragmatic and cautious: he stressed that Soitec will remain prudent in commitments until customer engagement is clearer, but he also described the incubators and new client/product-centric organization as positioning the company for its next phase of growth.

Albin Jacquemont emphasized financial discipline and balance-sheet cleanup, saying actions on inventories, working capital, costs and CapEx are all aimed at better cash generation. He cited H1 operating cash flow of EUR 26 million, free cash flow of minus EUR 31 million, cash and investment of EUR 483 million pro forma after the OCEANE repayment, net debt of EUR 145 million, and leverage of 0.5x EBITDA. He also detailed a EUR 41 million SmartSiC impairment, a EUR 17 million one-off noncash FX loss, gross R&D down EUR 23 million, SG&A down EUR 6 million, and said H2 fab underutilization will be significant and weigh on profitability.

Analysts focused on the magnitude and timing of margin pressure from lower fab loading, the SmartSiC write-down and what remains on the balance sheet, inventory levels at customers, and the outlook for POI, pricing and the GlobalWafers situation. Management said H2 gross profit, EBIT and EBITDA should decline sequentially because fab loading will be significantly lower, making idle costs and underutilization costs significant. On inventories, Pierre said customer inventory levels in 8-inch equivalent wafers were about 2.3 million versus 2.5 million in July and should keep depleting through H2 and into FY2027. On SmartSiC, management said they still expect some business and are maximizing asset fungibility; on pricing, they described low single-digit declines overall, offset by mix and new products.