Aixtron reassures investors despite decline in orders

The semiconductor equipment manufacturer Aixtron is confronting investors' fears of a potential slump in demand for the production of silicon carbide (SiC) semiconductors with an optimistic message. The acquisition of additional customers, including a top-5 manufacturer in this sector, was reported as a positive sign. Despite a slowdown in order intake in the first quarter, the management team, led by CEO Felix Grawert, is sticking to its targets for the year 2024, even though some skeptical views now graze the lower end of the forecast range. After the quarterly figures were released, Aixtron's share price initially picked up before a setback brought it down to 21.85 euros – a decline of 4.3 percent, which made the papers one of the MDax losers. Whether the share price base between 21 and 23 euros remains stable is now the question in the market. In the first quarter, Aixtron had to report a 14 percent decline in order volume to approximately 120 million euros compared to the previous year, a more significant slowdown in comparison to the previous quarter. This was also influenced by the previous boom due to capacity expansion in the chip industry. The more efficient and resilient SiC electronic chips open up innovative possibilities especially for the fast charging technology of electric cars and in the field of renewable energies. Furthermore, gallium nitride (GaN)-based power and high-frequency electronic chips, already used in many rapid charging power supplies, are coming to the fore. Particularly in the area of MicroLED production, where customers are increasingly focusing on development and pilot plants, Aixtron is providing positive momentum – more than a third of the order intake is recorded here. The technology has potential but is still before widespread market penetration, which is where investor concern primarily focuses on the demand for SiC facilities. Industry analyst Olivia Honychurch from the investment firm Jefferies believes market concerns about SiC facility demand are exaggerated and points to the newly acquired customers of Aixtron, even though the quarterly figures fell below forecasts. Existing SiC customers might have scaled back their expansion efforts. Meanwhile, Aixtron's revenue in the first quarter grew by approximately 50 percent over the previous year to 118 million euros, with the lack of export licenses negatively impacting the previous year. Against this was a profit before interest and taxes of 9.9 million euros and a net surplus of 10.8 million euros – significantly more than the previous year, but less than the last quarter of 2023. Revenue expectations were exceeded, but profit did not meet analyst forecasts. For 2024, Aixtron is targeting revenues between 630 and 720 million euros, with an EBIT margin of about 24 to 26 percent envisioned. CEO Grawert expects revenues of 120 to 140 million euros for the current quarter. Still in February, Grawert had announced a normalization of the export permit situation, but with regard to the uncertain development in the electromobility market and possible fluctuations in approvals, he chose a broad annual outlook range. If everything were on a normal course, the upper half of the sales forecast would be achievable. In a conference call with analysts, the Aixtron CEO now qualified this outlook, noting that future demand for certain conductor semiconductor facilities must also be considered.