Siltronic AG (WAFGn.DE) has reported its Q2 2024 earnings, indicating resilience amidst a tough demand environment for wafers. The company has managed to slightly upgrade its full-year guidance for 2024, aligning with the upper end of its estimates.
Despite a challenging market marked by high inventory levels in the chip sector, Siltronic's Q2 sales saw a marginal increase from the previous quarter, and they maintained a robust EBITDA margin of 25.8%.
The company is implementing cost and liquidity management measures to counter the weak demand and anticipates a lower EBITDA margin for the second half of the year.
Key Takeaways
- Siltronic AG reports marginal quarter-on-quarter sales increase in Q2 2024 despite challenging demand.
- Full-year guidance for 2024 slightly upgraded, with expectations of end market growth around 6%.
- EBITDA margin expected to be lower in the second half of the year, ranging from 23% to 25%.
- Full-year CapEx guidance revised downwards to €500 million to €530 million.
- Company maintains 2028 midterm ambitions for substantial sales growth and improved EBITDA margin.
Company Outlook
- Siltronic AG expects a solid end market growth of 6% in 2024, primarily driven by AI server growth.
- The company's midterm ambition for 2028 includes sales growth to over €2.2 billion and an EBITDA margin in the high 30s.
Bearish Highlights
- The company anticipates a lower EBITDA margin in the second half of the year due to negative price, product mix, FX impacts, and ramp costs of a new fab.
- Depreciation expected to be significantly higher than the previous year, rising to below €300 million.
Bullish Highlights
- No major long-term agreements (LTAs) are expiring this year or next, providing stability in sales.
- Siltronic does not see significant changes in market share and notes a decreasing trend in wafer inventories.
- There are no major concerns from competition in China or from alternative products like SiC or GaN.
Misses
- Full-year sales guidance updated to a high-single-digit decline, slightly better than the previous estimate of around 10%.
Q&A Highlights
- Company is equally represented across memory, logic, and power segments, with a slight overexposure in memory.
- Siltronic's sales are primarily based on long-term agreements, with no significant volume shifts in Q2.
- The company can adjust CapEx spending in response to market conditions and is currently pursuing a project in Singapore.
- Wafer inventories are decreasing, with variations among different customers, and the situation is expected to improve depending on end market dynamics.
- Q3 figures will be announced on October 24.
Siltronic AG remains cautiously optimistic as it navigates through the current market challenges. The company's strategic measures to manage costs and investments, along with its diversified portfolio and stable long-term agreements, provide a buffer against the volatile demand environment. Investors and stakeholders will be watching closely as the company releases its Q3 figures later in the year, which will offer further insights into Siltronic's performance and the semiconductor industry's trajectory.
Full transcript - None (SSLLF) Q2 2024:
Operator: Hello, everyone, and welcome to the presentation of the Siltronic's Q2 2024 Results. Please note that this call is being recorded and streamed on Siltronic's website. The call will also be available as an on-demand version later today. Your participation in this call implies your consent with us. At this time, I would now like to turn the conference over to Verena Stutze, Head of Investor Relations and Communications of Siltronic AG.
Verena Stutze: Thank you, Morris. Welcome, everybody, to our Q2 2024 results presentation. This call will also be webcast live on siltronic.com. A replay of the call will be available on our website shortly after the end of the call. Our CEO, Michael Heckmeier; and our CFO, Claudia Schmitt, will give you an overview of our financials, the current market development and our guidance. After the presentation, we will be happy to take your questions. Please note that management comments during this call will include forward-looking statements that involve risks and uncertainties. For a discussion of risk factors, I encourage you to review the safe harbor statement contained in today's press release and presentation. All documents relating to our Q2 '24 reporting are available on our website. I now turn the call over to Michael for his remarks.
Michael Heckmeier: Thank you, Verena, and a warm welcome also from my side. As usual, let's start with the key messages of today's call. There were no major surprises in the second quarter of 2024, which continued to reflect a challenging demand environment for wafer due to elevated inventory levels in the chip industry. Therefore, end market growth is not translating into our order intake yet this year. Despite these challenges, we are on track to meet our full year guidance for 2024 and can even slightly upgrade it today towards the upper ranges. To bridge the period of weak demand in the wafer industry until growth resumes, we have implemented a package of measures focused on cost and liquidity management. We already transitioned our production from max output to high productivity and efficiency when the demand weakness started last year. Accordingly, our labor costs were adjusted to the lower output, for example, by using working time accounts, reducing the number of temporary employees and implementing a qualified hiring freeze. Additionally, we are continuously working on strict and effective working capital management. Our CapEx has been further reduced compared to the previous guidance. As previously communicated, the dividend for 2023 was halved and we have an even more intensified cost management in place. Now let's take a high-level look at our Q2 developments and Claudia will present a detailed overview in a minute. The operating figures are in line with expectations and we managed to slightly increase our sales quarter-on-quarter. Our profitability remains solid with an EBITDA margin of 25.8%. Although we have passed the peak of our investments, the CapEx primarily required for the ramp of our new fab in Singapore has, as expected, led to a continued negative cash flow. On the positive side, prices were almost stable quarter-on-quarter. Claudia will now give you a deep dive into our financial performance before I report back with updates on the market development and the guidance. Claudia, please.
Claudia Schmitt: Thank you, Michael. A warm welcome also from my side. Let's jump directly into the analysis of our results. Q2 developed largely as expected, affected by soft demand, but with resilience. Our sales came in at €351 million, marking a 2.3% increase quarter-on-quarter, mainly driven by a higher wafer area sold. Prices and FX remained almost stable. Our Q2 EBITDA reached the same solid level as Q1, €91 million. The EBITDA margin of 25.8% was marginally down compared to the previous quarter. The effect of the small sales increase was offset by a negative FX result of minus €1 million in Q2, meaning a sequential decline of €6 million. As expected, the beneficial as exceptions that were concluded in 2022 have mostly expired by the end of Q1. Our EBIT came in at €33 million, affected by an increase in plant depreciation in Q2. The financial results in Q2 is clearly reflecting the high investments with lower interest income from our cash and securities and higher interest expenses for our debt financing. Taking all these factors into account, we concluded Q2 with a net income of €22 million. Let us now turn to the most important developments on our balance sheet. At the end of June, total assets summed up to roughly €4.6 billion after €4.5 billion by the end of '23. This change is mainly driven by our ongoing investments, which increased fixed assets by €242 million. Consequently, our cash and securities has decreased to less than €350 million by the end of June. The equity ratio remained resilient at a very healthy level of 47%. Financial liabilities in H1 increased as we've drawn the first €50 million of our syndicated loan in Q1 and another €100 million in Q2, bringing our total loans to €960 million by the end of June. You may recall that our working capital ratio at the end of '23 was at an all-time low, mainly due to a CapEx-related surge in trade payables. In the first half of '24, we saw the reversal of this. The spillover from Q4 was significantly reduced. Trade payables decreased as planned to €317 million at the end of June. Customer prepayments summed up to €600 million with €28 million received and €15 million refunded. In H1, our CapEx amounted to €314 million. While our investment level is still elevated, it has significantly declined compared to the two halves of '23, during which we invested between €600 million and €700 million each. Reflecting our intensified focus on CapEx management, we have revised our full year CapEx guidance downwards for the second time this year, now targeting in a range between €500 million and €530 million. The majority of this CapEx is allocated to our new fab in Singapore. Speaking about our new fab, the official grand opening ceremony took place on June 12, with the Deputy Prime Minister of Singapore Heng as a guest of honor. This event was a significant milestone for us that we will remember for a long time to come. While ramping the new capacities, our major focus this year is on customer qualifications. This is crucial to ensure that we are fully prepared when the labor demand returns to growth. Depreciation for the new fab will start in Q4. This fab is expected to boost our sales and EBITDA margin in the medium term. The high degree of automation and a favorable product mix combined with the scale effects of both the existing site in Singapore and the 300-millimeter ecosystem at Siltronic will significantly increase the future profitability of the Siltronic Group. Let's take a closer look at our debt situation. As illustrated in the bridge on the left-hand side, Siltronic had a net financial debt of €356 million at the end of '23. Higher CapEx payments exceeded our operating cash flow in the first half of the year, partly due to the previously mentioned CapEx liabilities overhang from '23. In H1, we've recorded investment grant of €32 million, which positively impacted our cash flow. On the other hand, we had a cash outflow of €36 million for the dividend payment. In total, our net financial debt amounted to €639 million. You are already familiar with this financing picture, so I'll just provide a brief update. As mentioned before, we've drawn €150 million of the syndicated loan in H1. A total of €230 million has not yet been called up. As previously announced, we will undertake refinancing this year and are currently preparing for it. Please understand that we cannot precise this at the moment. More details will follow later this year. However, I would like to reiterate that we currently have no plans for a capital increase. With this, I hand back to Michael.
Michael Heckmeier: Thank you, Claudia. When looking at this slide, let's start with some encouraging news. The end markets are mostly growing. Our end market growth forecasts have been slightly raised to around 6% in '24. This is driven by a better-than-expected smartphone recovery, although I would still call it modest and AI is starting to slightly improve net content PCs on top of stable PC unit recovery. As you see, the main contributor for 2024 is the server growth, driven by artificial intelligence. However, the still elevated inventories need to be reduced and this takes time. This inventory situation overshadows the positive trend from the end markets and result in an overall negative labor demand in the mid-single-digit percentage range. Overall, this is a slightly more positive picture compared to our April communication. At this point, I'd like to emphasize that we have some encouraging results from chip manufacturers and designers in recent months. This is very pleasing. However, please keep an eye on what is actually driven by volume versus price. In many cases, it's predominantly price-driven, which is not related to wafer demand. Now let's take a closer look at the key driver for 2024, artificial intelligence. An AI server can contain up to 8 times more silicon content than a conventional server. The most significant content growth in an AI server is driven by DRAM, including high-bandwidth memory. As AI drives as well DRAM in PCs and smartphones, the demand for DRAM chips have increased overall. NAND is considered a smaller component in AI servers and also PCs and smartphones. This explains the modest recovery in on-chip demand. We will need both continuous growth in DRAM and a strong NAND recovery to reduce wafer inventory significantly. The processing power in AI server comes from GPUs, as they provide the performance for the AI tasks such as deep learning. Furthermore, two CPUs are included in an AI server. About one-fifth of the silicon area in an AI server is dedicated to logic. In general, we continue to see elevated inventory levels for logic, but this varies significantly from customer to customer. In addition, power chips are essential in AI servers and in electricity management for the complete data center. However, across all end markets, power inventories have not yet improved. Let's now turn to the guidance for the financial year 2024, which we slightly upgraded. We now expect 2024 sales to be in the high-single-digit percentage range below 2023 levels. This is primarily volume-driven, but we also expect small effects from FX at the US and euro-US rate of $1.10 as well as product mix and pricing. We have clearly improved our EBITDA margin guidance to the upper end and now expect it to be in the range of 23% to 25%. Given that our H1 2024 EBITDA margin was 26.1%, it's evident that we expect a lower margin for the second half of this year. This is due to several factors. On the one hand, we expect slightly negative price, product mix and FX impacts, especially weighing on H2. Additionally, in Q4, the ramp costs of our new fab will be visible for the first time in our profitability. On the other hand, there will be a planned maintenance in one of our product key lines. To avoid the sales impact, we will see an inventory impact, which will negatively affect our margin. There's no change in depreciation, which is projected to be below €300 million. This is a significant increase from the prior year's €203 million. As previously communicated, we have a stringent CapEx management in place. Therefore, we expect to further reduce CapEx this year from the April guidance of slightly below €550 million to range between €500 million and €530 million. Due to the steep decline in CapEx, we anticipate a pronounced improvement in net cash flow, although it will still remain significantly negative. As demonstrated this year, even starting from a modest base, our industry's future growth will be driven by significant trends such as AI, digitalization and electromobility. Therefore, we would like to conclude this presentation confirming our midterm ambition for 2028. We expect a substantial sales growth to more than €2.2 billion and an improvement of the EBITDA margin to the high 30%s by 2028. Thank you very much for your attention. And with this, we close our presentation, and Claudia and I are happy to take your questions. Morris, please open the Q&A session.
Operator: [Operator Instructions] And the first question comes from Harry Blaiklock from UBS. Please go ahead.
Harry Blaiklock: Good morning. Thanks for taking my question. Wondering whether you could give a bit more color around what you're seeing this quarter that's driven you to lift full year guide versus what you previously expected, both on the top-line level and EBITDA margin as well?
Michael Heckmeier: Sorry, acoustically, this was very difficult to understand. May we ask you to repeat the question a bit slower, please?
Harry Blaiklock: Of course, I'll try and be a bit clearer. I'm just wondering whether you could give some more color around what you're seeing that's driven you to lift the full year guide versus what you previously expected, both on the top-line and margin as well?
Michael Heckmeier: Okay. Harry, to be honest, we're not sure we understood you correctly, but I assume your question was how we look at revenue and EBITDA going forward into this year, and what were the reasons for the guidance upgrade?
Harry Blaiklock: Yes, that's right.
Michael Heckmeier: Okay. Yes. So, actually, I mean, we are now seven months in the year and we have, I think, much better visibility. So therefore, after the, let's say, very sluggish beginning of the year, we had the two ad hoc communications, as you know, we did set the margins and the ranges in a way that we were almost certain to achieve them. And this has now been more precise as well deeper into the year, seven months are almost gone. And that was the main reason why we, on the one side, upgraded the sales guidance a bit to the higher range, mid-single digit decrease compared to last year. And high-single-digit -- sorry, high-single-digit compared to last year. And on the EBITDA side, we also could drive the guidance to the upper range that has been communicated in April.
Harry Blaiklock: Got it. Thank you. And I'll try and ask another question. Hopefully, it's clear. But you mentioned the stronger demand isn't yet reflected in your order situation due to the elevated inventories. So, when do you expect those orders to start coming through? Are customers saying that they're going to start ordering in H2 and that's what gives you confidence?
Michael Heckmeier: So, this is a very difficult question, and thank you, Harry. The question we understand is how long will it take until the end market growth will make its way through the inventories of our customers and the supply chain. The honest answer is we don't know. It's a bit the crystal-ball thing we started to talk about already last year, but it will come, every day will help. But today, we are not in a situation to give you a clear timeline when we see a clear recovery coming through to our order books and then eventually to our sales.
Harry Blaiklock: Got it. Thank you very much, Michael.
Operator: And the next question comes from Constantin Hesse from Jefferies. Please go ahead.
Constantin Hesse: Hi, there. Good morning. Thank you very much for taking my questions. So quickly, just a very quick question. Just on the mix of growth, what drove this volume increase quarter-over-quarter? Was it 300-millimeter? Was it mainly 200-millimeter? Just maybe some color there? And a second question then, if we can talk a little bit about the pricing dynamics? So, when you say that price, you expect a slightly negative price in the second half, is that mostly on the spot side? Maybe you can comment a little bit as well on customer behavior around long-term agreements? Are you seeing any pressure there, or are you very confident that the long-term agreements are currently being set at this price -- at the higher price levels that you had expected?
Michael Heckmeier: Yeah, thank you, Constantin. First question was whether we have any specific comments on quarterly volume dynamics. I think we cannot comment in great detail, but I would call it pretty unspectacular. So, there's nothing particular to mention on the volume side on the quarter-to-quarter situation. Pricing-wise, we said, overall, we have a small pricing effect this year. So, what we can say is LTAs are coming as contracted. There's no change in that one. And as we already communicated, we see some price dynamics on the non-LTA space. And we can also say it's more pronounced in smaller diameters, yes. So -- but this is overall a small effect, as we said and what I just said is partly explaining a small effect. So, it's really small effects here and there.
Constantin Hesse: Okay. But Michael, do you expect...
Michael Heckmeier: LTAs, as we said, has contracted. We also don't see major LTAs expiring this year or next year. So, also, we manage it as we always do as a portfolio. I wouldn't say there's anything spectacular we can report today on the LTA space.
Constantin Hesse: That's good. And then, last question and to follow to Harry on the momentum around inventories and orders. I mean, if you look at the inventory decline momentum that you have visibility on and you look at the current utilization that you're running on, you must have some kind of a view in terms of when you believe the destocking should be done. If you look at the current level of inventories coming down every month, even though it's not a pronounced decline, I mean, that should give you some visibility in terms of how many months you still expect this destocking cycle to continue given the current demand, I would assume? And then, around that, I'd also like to understand a little bit what's happening to power inventories. Do you see the risk of another potential downgrade to volumes, so in terms of utilization for you? If you can comment a little bit on that, that would be great.
Michael Heckmeier: Yeah, thank you, Constantin. As I said already, we're really reluctant to give an overall timeline of recovery here. The situation is that it's really a mixed picture and depends also strongly on different customers. If we went into any more details, it would be really also competitive information, which, we, of course, are not able to discuss in such a short period. So therefore, inventory are decreasing in memory and logic, but still, it will take some time, that is what we can say. The good news is really that end market demand did slightly increase. I think that's on the positive side. The power, we don't have a Q2 data yet, yeah. But you saw, of course, the report from some of the customers. So, there is inventory increase to be assumed there more than a decrease currently.
Constantin Hesse: Okay. Understood. But when you talk to your customers, are they comfortable with the current amount of wafers that you're supplying, or do you see any kind of pushback currently from your customers on the power side in terms of supply levels?
Michael Heckmeier: We had and I think we communicated that we had volume shifts already in this year and it's continuing here and there. That's maybe as much as I can say.
Constantin Hesse: Okay. Thank you.
Operator: And the next question comes from Daniel Schafei from Citi. Please go ahead.
Daniel Schafei: Hi. Good morning. Yes. Maybe just to add on to the last comment you just mentioned on volume shifts, given that we've seen this in the second half of this year, do you expect any more to come given that, especially in power, inventories are continuing to rise?
Michael Heckmeier: Yeah, I think we have volume shifts. It's part of the current situation. And today, we cannot declare victory on the end of this. There will be some here and some there. And you highlight the power segment, so that good one where we also will face, like the industry, some further discussions, yeah.
Daniel Schafei: Okay. And then, on LTA agreements, given that you said they're coming in in-line with what you had specified before, given, during the last call, you've mentioned that you have usually a corridor in which kind of this LTA pricing falls, do you see customers putting pressure and kind of going towards the lower-end of the corridor, or how do you see the environment there?
Michael Heckmeier: Let's phrase this clearly. Overall, for the whole year, a small price effect, yeah. So, the whole portfolio sees a small price effect. And the major sub effect here, we would call the non-LTA space, where we see particularly on the smaller diameters, the pricing situation coming in. I don't think we should discuss more timely sub effects of this overall small price effect.
Daniel Schafei: Okay. Thank you.
Operator: And the next question comes from Gustav Froberg from Berenberg. Please go ahead.
Gustav Froberg: Good morning. Thank you for taking mine as well. First one is around the topic of volume shifts within the LTAs, et cetera. Did you see any pull in of wafer orders in Q2, i.e., for example, orders that were pushed out that were brought forward again, or were there any other temporary or kind of one-off reasons that drove volumes in Q2? That's my first question.
Michael Heckmeier: I think the short answer is no. We have no particular volume effects between quarters we want to mention here. What I could say is it's a bit different dynamics in memory, logic and power, yeah, but no particular quarterly volume shift at this point in time.
Gustav Froberg: Okay. And then given a large portion of your sales are based on these long-term agreements, gives you pretty good visibility, are there any other moving parts in the second half that might drive variance towards your now new full year sales guidance?
Michael Heckmeier: It's mainly -- maybe I'll start with a high-level statement. Claudia can add to maybe a few comments on the cost side. But the main driver for the change of the guidance is really the top-line where we could slightly go to the upper range of our earlier guidance, high-single-digit decline versus last year compared to around 10% was the previous guidance. And of course, this better-than-expected top-line development is driving some further implications into the P&L on the cost side.
Claudia Schmitt: Gustav, I think there's nothing more to add. I think we disclosed all the influencing factors on our H2 profitability in the speech. So, nothing more to add from my side.
Gustav Froberg: Okay. All clear. Last one for me. Just on, I guess, product exposure, if you will, could you help update us on how you see Siltronic exposed to memory, logic, power, et cetera, maybe relative to the overall market?
Michael Heckmeier: Yeah. I think there is no change. These fundamentals don't change on a quarterly or monthly basis. So, we are almost equally represented in these three segments, and it's unchanged. To be true that we maybe have a slight overexposure in memory.
Gustav Froberg: I'm sorry, I didn't catch the last one. Slight overexposure, was that in memory?
Michael Heckmeier: In memory, yeah.
Gustav Froberg: Yeah. Okay. Super. Thank you very much. That's all from me.
Michael Heckmeier: Thank you, Gustav.
Operator: [Operator Instructions] And the next question comes from Jürgen Wagner from Stifel. Please go ahead.
Jürgen Wagner: Yeah, good morning. Thank you. I have a question on cash flow. How should we model it in the second half? And then, in your handout, you talked a bit about AI server driving wafer demand. And where would you benefit first or more than your peers looking at the five products you have shown us? Thank you.
Claudia Schmitt:
.:
Jürgen Wagner: Okay.
Michael Heckmeier: And Jürgen, answering your second question is very difficult. Where would we benefit more than peers? So, of course, our peers also would like to know this. What I can say is, of course, the high-level considerations here would be that we have a bit overexposure in memory and what we already said, but that would hold true for everybody and that the power situation is inflating slightly on the inventory side. I think these are the comments you can maybe build into any assumption of this AI demand on the silicon space, but I would be reluctant to go into more, let's say, competitive intelligence in this year.
Jürgen Wagner: Okay. Thank you.
Operator: And the next question comes from Robert Sanders from Deutsche Bank (ETR:DBKGn). Please go ahead.
Robert Sanders: Yeah. Good morning. Hi. Thanks for taking my question. I guess the first question just on the balance sheet. You say you're refinancing at the second half of this year. Just what portion of your outstanding debt is being refinanced? I see you have an undrawn syndicated loan of €230 million as well. But I'm also interested in what is the maximum level of leverage based on net debt-to-EBITDA that you're willing to go to? Thanks.
Claudia Schmitt: Hi, Robert, good morning. This is Claudia. I'll take your questions. Yes, you are right. We still have €230 million, which has not been drawn out of the syndicated loan in addition to our slightly below €350 million existing cash and securities. So, you can assume that we are still cash rich and we can take a calm approach to refinance. And we are now preparing for it. And as I mentioned before, at this point in time, we cannot comment further on this, not the amount, not the instrument, except for it's not a capital increase.
Robert Sanders: Got it. And can you remind me how much to go till full buildout until -- in Singapore? Because it does worry me the amount of capital that you still need to spend to fit out that line and you don't really have enough operational cash flow to pay for it. So, I'm still struggling to really understand how you're going to avoid doing a capital raise next year, to be honest.
Claudia Schmitt: Yeah. We didn't disclose. The total project amount is €2 billion until end of this year and this still holds true. And then, we are going to ramp this fab over several years, as we mentioned during our Capital Markets Day. We don't expect the fab to be fully ramped in 2028. So, you see there are years to come during which we will ramp the fab and during which we will spend CapEx on this. So, it's a stretched approach of CapEx. So, we feel very comfortable with our financing for FabNext.
Robert Sanders: But -- last question then, just on FabNext. Why not just delay the fab another year? Yeah, I understand you've made the commitment. You've opened it. You want to get on with it, but it is going to dilute your financials. It's going to take a while to be justified by the environment. Your loading is probably only 75% at the moment on your existing footprint in 300-millimeter. So, why not just do another delay? Thanks.
Michael Heckmeier: So, hi, Robert, this is Michael. I'll take this question. It's maybe not only on the finance side of things. Our new fab, of course, the key target for this year and also next year is qualifying products with customers. And that takes time. So therefore, just pausing or stopping it for a while wouldn't make sense at all, because we have to make this fab ready when the demand is picking up. So therefore, the current operations is running. We have some first qualified products, major qualifications to come in the next couple of months. And this is something that is ongoing at the multiple customers and particularly with the big customers. So, we need to go through this with the customers together to be ready, then they can be shipped out of this fab once demand is picking up. And -- okay, maybe to finalize and relate back to the CapEx spending, the speed we're doing this, we can adjust as we did already in '24 and '25. And that, of course, is then also related to the needed CapEx. If market is slower, we can also further pull the brake in there. And then, of course, if market is speeding up, we want to be ready and then we would be also happy to spend the money on the CapEx side to fuel the demand that is coming.
Robert Sanders: Got it. Thanks a lot.
Operator: And the next question comes from Martin Jungfleisch from BNP Paribas (OTC:BNPQY). Please go ahead.
Martin Jungfleisch: Yes, good morning, everyone. Just two questions, please. The first one is just on the phasing of the revenues in Q3 and Q4. So the guidance, I think, now suggest flattish sales in the second half versus the first half. I think you're not guiding quarterly, but is the assumption that Q3 should be up versus Q2 and then Q4 down or vice versa, or should both be flattish quarter-on-quarter in terms of revenues? And then, the second question is on LTAs again. I'm not sure if you have commented already, but is there any larger LTA expiring this year? Thank you.
Michael Heckmeier: Hi, Martin, and thanks for your questions. As you know, we don't give any quarterly phasing. So therefore, if you do your simple math model, you will be fine and we will not give any quarterly guidance, Q3, Q4. On the LTA side, you're absolutely right. No major LTA is expiring neither this year nor next year.
Martin Jungfleisch: Cool. Thank you.
Operator: And we do have a follow-up question from Daniel Schafei from Citi. Please go ahead.
Daniel Schafei: Yes. I just wanted to ask [prudency] (ph). In terms of market share, given that we've now seen a slight more positive tone from peers, especially in Japan, how do you see market share evolving for you going forward now this year and maybe also onwards?
Michael Heckmeier: Yeah. I mean, when you look -- I mean, we don't have a lot of Q2 news from the industry, from our peers, but when we analyze carefully the statements around -- occurring around Q1 and what is out already for the rest of the year, we don't see it's a lot more positive than we are. In terms of market share, we don't see any significant changes for the time being, also not for this year. And we always have to have in mind some customer phasing, customer mix topics, but this is more a general remark than anything that is really applying to the current discussion.
Daniel Schafei: Okay. Understand. And just maybe on wafer inventories. If we look now at SUMCO's presentation and in general, would you say you echo this that we see a decreasing dynamic in memory and logic on wafer inventories?
Michael Heckmeier: So as usual, we don't comment on particular peer's statements, but yes, we see an overall decrease in trend. It's particularly pronounced different customers. There is a different picture at different customers. That's the thing I would like to emphasize. And then, it will depend on further end market dynamics, how long it will take until the end market and is working its way through the overall situation. And I gave some hints about DRAM and NAND in the speech, right, that will take some more demand on both ends to eventually come on the memory side to more normal levels again.
Daniel Schafei: Perfect. Thank you.
Operator: And we have another follow-up question from Constantin Hesse from Jefferies. Please go ahead.
Constantin Hesse: Thank you. Just very quickly a maintenance question. Anything out of China or competition from alternative products such as SiC or GaN, anything that you'd like to comment there or nothing major still?
Michael Heckmeier: So thanks, Constantin. We don't see unusual China dynamics or anything compared to what we commented earlier, so they're working their way up into the wafer space. Still much technical differences in the higher-end 200-millimeter, particularly in leading edge. Geopolitics is healthy there, as they -- in the, let's say, local China, ecosystem have not access to leading-edge technology to the respective machines, et cetera, et cetera. So, I think that's unchanged as a general situation. We see in the current more soft demand that also new technologies are -- the enthusiasm went down a bit, when you read the SiC news, the silicon carbide news. GaN also became a bit more and more quiet. So, we don't think there is a particular dynamical situation with new ones right now. From a strategic perspective, there is no change, but for us, SiC is not a topic and will not be a topic anymore. GaN, we're still evaluating on an R&D scale. We will do some customer sampling and we're looking into the business development into a business model. But both not a threat to the silicon world. Key statement still, it's below 5% in 2030 compared to the silicon area overall. So, my summary would be SiC is gone. GaN is a potential opportunity for us. And for sure, both are not a threat for the silicon space.
Constantin Hesse: That's great. Thank you very much.
Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Verena Stutze for any closing remarks.
Verena Stutze: Thank you, Morris. This concludes our Q&A session. Thank you for joining us today. Our Q3 figures will be released on October 24. Stay healthy, and let's talk again soon.
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