Silicon Wafers. Peak Pessimism?
Siltronic & SUMCO both currently trade well below book value & their peers aren't doing all that much better either
Back in September 2024, we did the following deep dive into the silicon wafer segment
Silicon Wafers. Recovery Is Nigh Yet Valuations Have Slumped To 5 Year Lows. But Why?
The Silicon Wafer segment began to experience its version of the present downturn in Q123 when quarterly area shipments slumped by 11.25% YoY.
In our closing paragraph there we noted the following:
The key silicon wafer players are trading at historic lows. The reasons are clear. Their profitability has been eroded by a combination of falling wafer shipments (down 14% YoY in 2023 and likely down a further 5% in 2024), lower utilisation rates and increasing depreciation costs triggered by huge increases in CapEx over the past two years.
On the bright side, the worst of their downturn is over. We expect to see gradual improvements in revenues and EBIT over the coming quarters. It will likely take 4-6 quarters before they see a return to their most recent highs.
Now six months after we published that article, it’s time to take a look at what’s been happening in the beleaguered sector. Let’s dig in….
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