Siltronic - Committed to sustainable growth. Dr. Christoph von Plotho CEO September 21, 2017

Transcription

1 Siltronic - Committed to sustainable growth Dr. Christoph von Plotho CEO September 21, 2017 Siltronic AG 2017

2 BUSINESS ENVIRONMENT.operating in a continuous growing and improving environment.. Siltronic AG 2017

3 Increasing demand for electronic devices and new applications drive semiconductor growth, which in turn fuels silicon demand. Electronics value chain 2016 Electronics USD 1,457bn Semiconductors USD 327bn Semiconductors silicon wafers USD 7.2bn Silicon for electronic applications USD 1.2bn Siltronic - Committed to sustainable growth Siltronic AG

4 Siltronic is focused on growing 300mm and attractive 200mm business Development of total wafer demand per diameter, in million 300mm equivalents per month mm 200 mm SD Strong demand & growth Stable & attractive Mid-term decline Source: SEMI up to June 2017, Siltronic estimates 4

5 IHS confirms silicon area growth forecast of 4.7% for 2017, with growth spread upon a wide range of applications Wafer demand 2000 / 2016, in bn cm² Growth 2017 / 2016, in % Total Market % Mobile / Smartphones % Desktop, Notebook & Server PC % Industrial % Solid-State Drives 5.7 8% Automotive % Appliances, Video Players etc % Switches, Hubs, Modems etc % Media Tablets & Tablet PCs 2.8 0% Mobile Infrastructure etc % LCD TVs 1.8 2% Others % Source: IHS Markit Technology (Semiconductor Silicon Demand Forecast Tool, Q3 17 Update) 5 5

6 As % of Q Semiconductor revenue vs. silicon area and silicon revenue Semiconductor vs. Semiconductor silicon revenue vs Silicon and silicon Revenue area and Silicon Area 300% 250% 200% Silicon area Semic. revenue Silicon revenue 150% 100% 50% 0% Source: WSTS and SEMI up to Q

7 Silicon demand for industrial and automotive applications is expected to record high growth in the next years Silicon demand for main wafer consuming applications, bn cm² and CAGR Computing 2% % 21 3% 3% 23 Mobile Phones 7% 18% 16 1% Industrial Automotive 7% 3% 4% 7% % 7% 7% Source: IHS Markit Technology (Q3 17 Update) Note: Mobile phones: Smart & Feature phones; Computing: Desktop, Notebook & Server PC & periphery, Tablets, SSD & DRAM 7

8 200mm and smaller diameters benefit from growing demand in industrial and automotive applications. Computing PC, Server, SSD Tablet 12% 2% 15% 1% Mobile Phones Smartphones, Cell Phones 86% 84% +3% % Industrial Automation, Energy, Medical, Aerospace, Military 20% 52% 28% 46% 11% 43% Automotive Cars, Commercial Transportation, Infotainment +7% mm 200 mm SD +7% Source: IHS Markit Technology (Semiconductor Silicon Demand Forecast Tool, Q3 17 Update) 8

9 SILTRONIC PERFORMANCE well prepared to gain from future growth.. Siltronic AG 2017

10 Siltronic is a strong wafer supplier with leading-edge technology Top 5 wafer producers serve more than 90% of market across all diameters Comments 16% 10% 15% Siltronic with long-term stable market share of around 15% Siltronic recognized as technology leader in the industry 28% 31% Joint development programs with most 300mm customers Qualified at latest Design Rules SK Siltron Siltronic Shin Etsu Sumco GlobalWafers Sources: Companies revenue reports 2016, converted to USD million 10

11 Long-term EBITDA margin trend clearly above industry average Adjusted 1 EBITDA margin, in % w/o hedging 27% Comments Siltronic targets to become one of the two wafer suppliers with highest EBITDA margin for the full year % 13% 14% 13% 16% figures adjusted for consolidation effects resulting from acquisition of SSW and restructuring Source: Siltronic Guidance: EBITDA margin 2017 at least 27% 11

12 Successful cost reduction programs continue Cost savings, in EUR million 1 ~55 Additional savings levers: ~45 Investing in automation in Germany ~30 Investing in new pullers to improve yields and capabilities Poly cost optimization ongoing 15-20e Further productivity increases through various initiatives Based on prior year cost basis to current year volumes and adjustments to certain current year costs to reflect prior year contractual and economic parameters (e.g. prior year unit labor cost). 12

13 Gross margin improves steadily Revenue vs. manufacturing costs, in -cent/cm² and gross margin, in % Revenue per cm² Manufacturing costs per cm² Gross margin Q1 14 Q2 Q3 Q4 Q1 15 Q2 Q3 Q4 Q1 16 Q2 Q3 Q4 Q1 17 Q2 13

14 Financials improved strongly over the last years Adjusted 1 financial figures (EUR million) H Sales EBIT (75.5) (87.3) (31.6) EBIT margin in % (7.3) (10.0) (3.7) EBITDA EBITDA margin in % CapEx Free cash flow (134.4) figures adjusted for consolidation effects resulting from acquisition of SSW and restructuring 14

15 SILTRONIC - AN INDUSTRY TECHNOLOGY LEADER Technological leadership - a constant race for improvement.. Siltronic AG 2017

16 The electronic industry drives the transition to new technology generations Electronic device manufacturers strive to improve cost and performance by introducing new technology generations This is connected with: device shrink (Design Rules) new materials 8 nm 42 nm SEM image of a current DR finfet new architectures new device types growing integration and increasing wafer requirements! Silicon substrate Source finfet picture: Intel 16

17 Flatness just one example A number of key ingot & wafer properties needs to be continuously improved to meet customers requirements Ingot Wafer doping level purity mechanical stability flatness edge flatness uniformity resistivity oxygen content homogeneity shape surface cleanliness 17

18 More Moore Siltronic s technology roadmap will stay One Generation Ahead Siltronic s Design Rule roadmap follows road to More Moore Technology node 300 mm / 16 nm 16 nm 16 / 11 nm 11 nm 11 / 8 nm 8 nm 8 / 5 nm 5 nm 5 / 3.5 nm 3.5 nm 300 mm development 16 nm Commercialization 11 nm Development Commercialization 8 nm Development Commercialization 5 nm Development Commercialization 18 18

19 Siltronic DR projects develop processes for upcoming wafer requirements one generation ahead The transition to the next DR typically requires an improvement of critical wafer parameters by ~ 30 %! Surface defects Shape How small is 20nm? 20nm height on a wafer a flat leave on the surface of the Chiemsee. Crystal homogeneity Surface / bulk metals Local / near-edge flatness Specifications down to 20nm! Image source: 19

20 Siltronic was able to substantially improve wafer geometry within the last two years Near-edge flatness improvement of P/P+ Epi wafers 70%! Early 2015 End of 2016 A substantial part of the near-edge geometry distribution could be improved by ~70% in high volume production. Siltronic wafers are widely used for the most advanced applications at the industry technology leaders. 20

21 Demand moving for leading edge capability drives invest Siltronic focuses on joint development project with main customers 300mm wafer market by Design Rule Siltronic focused to be qualified at latest DRs at main customers A high number of successful 300mm joint development programs with industry leaders are a strategic target of Siltronic Source: Siltronic internal estimate and classification 21

22 Siltronic is a leader in wafer technology and quality Technology leadership complemented with the highest level of quality First supplier to ship 300mm wafers Development of 8 nm design rule started in 2013 (commercialization 2017); Quality awards from several top semiconductor players Concurrently optimizing on 50+ wafer parameters of each design rule >400 engineers worldwide Approximately 1,700 patents issued and pending (as of Dec. 31, 2016) Single wafer traceability for 300mm Standardized processes across sites enabling copy exactly at product level 22

23 CAPEX STRATEGY Capabilities, automation and incremental invest to keep stable market share without providing excess capacity to the market.. Siltronic AG 2017

24 Siltronic focuses on capabilities, investments in cost reduction and efficiency improvement Automated Guided Vehicles mm productivity 1 (Germany) Benefits: Productivity gains >100% More dense packaging less carts more space in area of most valuable cleanroom Overhead Transportation Systems Quality performance less human contact to wafers/foubs Almost 100% increase of employee productivity in 300 mm wafer Maximizing equipment utilization Error prevention 24

25 300mm wafer demand is expected above industry supply capacity, after almost a decade of oversupply 300mm effective capacity vs. demand, kpcs per month ~5.3 mn wafers per month Gap between supply and demand expected to increase further in 2018 Demand (SEMI / IHS) Effective Capacity (Siltronic Est) Sources: SEMI, IHS, Siltronic 25

26 Siltronic Q4/ mm ASP 30% up versus Q4/2016 in USD 300mm polished price levels, in % (Q = 100%), in USD 150% Comments: Q3 prices at most customers on reinvest levels Depending of contract timeframes, remaining volume expected to reach reinvest price levels within the next quarters Positive price trend expected to continue throughout 2018 Customers with increasing concerns regarding long-term supply 100% Q Q Q Q Q Price level needed for reinvest Q

27 USD 300mm Siltronic Singapore with competitive advantages regarding cash costs per wafer Cash costs per 300 mm wafer polished, in USD 15% Comments: Cash costs per 300mm wafer produced in Singapore are ~15% below average industry costs High automation/modern equipment park Competitive labor costs & well trained operators Low energy costs Higher share of Siltronic wafers produced in Singapore leads to a reduction of average cash costs per wafer manufactured Siltronic Singapore Industry Average Source: Siltronic Estimates 27

28 Amount of investment needed per kwafer/month for 300mm capacity extension Investment needed per 300mm kwfr./month, in EUR million Comments: ~ 4 mn Capable cleanroom space available Facilities in place ~ 2 mn Connection to OHT (Overhead Transportation System) Siltronic Greenfield Continuous & incremental steps of ~10kWfr./month expansions are possible Including EPI Source: Siltronic Estimates 28

29 Siltronic shells capable to support market growth at least until 2022 Shell capacities, in kwfr./month: Comments: Siltronic shells only partly equipped ~ 40% Allows cost-efficient brownfield extension according to demand growth Siltronic shells capable to support market growth at least until 2022 Empty shell mainly located in Singapore Used Capacity Shell Capacity Source: Marketing & Sales 29

30 Growing Grinding Sawing Edge Rounding Lapping Cleaning & Etching Polishing Laser Marking Capacities per Equipment Group Size of increments of capacity extensions highly depending on appearing bottlenecks within a manufacturing line Example 300mm line capacity, in kwfr./month 1st Extension 2nd Extension Final Extension Comments: Incremental capacity extension means adding one additional equipment at the lineconstraining process step Throughput per equipment differs. Bath process tends to have the highest throughput per equipment. There might be a number of incremental steps possible to add e.g. 75 kwfer/month. Focusing on incremental steps helps to: Smooth growth according to demand growth Reduce risks by smoothen investments Current Line Capacity Additional Capacity through investments Capacity installed Equipment Targeted Line Capacity Provide options for timing adjustment in case unexpected demand shifts 30

31 Siltronic approach: To grow with the market - incremental invest to keep stable market share of ~15% 300mm market expected to grow ~ 4% p.a. long term 5.4 mn +4% Siltronic would only incrementally add capacities: Increments of kwfr./month - partly realized via debottlenecking To keep 300mm market share of ~ 15% 2017/18 only debottlenecking / OEE improvement possible - 18 month lead time to create additional capacity 15% 15% 15% 15% 15% 15% Total 300mm demand Siltronic share Focus of investments on Singapore site Any capacity extension to be supported by LTAs & customer prepayments Siltronic will continuously invest to support the market growth of ~4% p.a. by keeping stable market share and ensuring long term prices stay on reinvest level. 31

32 Capex to rise to EUR ~150 million in coming years Investment, in EUR million Comments: Extensions Exchange of ingot pullers (capabilities) in Freiberg to be completed in 2017 Already first preparations in 2017 needed to incrementally increase capacities later. 54 Base Level 80 Capex base level to sustain business: MOB (maintenance of business) Capabilities Cost reductions Automation Ø Future 32

33 Despite planned capex to support demand growth, EBITDA and cash flow will increase Cash flow increase per year compared to 2016, in EUR million Effect price increases Effect capex (extensions) 300mm revenue at 2016 prices ~ % price increase +160 Extension (25% epi), kwfr./month 35 Profit sharing - 20 Specific invest incl. preparations 2 Additional EBITDA / op. cash flow before tax Additional cash flow from investment - 70 Additional CF compared to 2016 (before tax) + 70m EUR + Increase EBITDA / CF per 35 kwfr./month + 18m EUR ROI ~ 5 Years Further increase of current price levels is expected 33

34 STRATEGY AND OUTLOOK no change in our proven strategy while enjoying improving returns.. Siltronic AG 2017

35 Siltronic strategy - capitalize on market opportunities while focusing on 300mm & technological leadership by growing with the market Improve returns, stay ahead in technology and grow with the market Strategic Focus Benefit from market growth & favorable FX Ensure technology & quality leadership Improve financial performance & cash flow Execute cost reduction roadmaps & debottlenecking concepts We continuously increase the value for our stakeholders by providing best-in-class wafers at competitive costs. 35

36 Contact and Additional Information Issuer and Contact Additional Information Siltronic AG Hanns-Seidel-Platz 4 D München Investor Relations: Petra Mueller petra.mueller@siltronic.com Tel ISIN: WKN: Deutsche Börse: Listing: DE000WAF3001 WAF300 WAF Frankfurt Stock Exchange Prime Standard Financial Calendar Q Results October 26,

37 Disclaimer The information contained in this presentation is for background purposes only and is subject to amendment, revision and updating. Certain statements contained in this presentation may be statements of future expectations, future financial performance and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. In addition to statements which are forward-looking by reason of context, including without limitation, statements referring to risk limitations, operational profitability, financial strength, performance targets, profitable growth opportunities and risk adequate pricing, words such as "may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, continue, projects or seeks, potential, future, or further and similar expressions may identify forwardlooking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These include, among other factors, changing business or other market conditions, currency and interest fluctuations, introduction of competitive products, poor acceptance of new products and services, change of the corporate strategy and the prospects for growth anticipated by the management. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Siltronic AG does not undertake and does not intent to undertake any obligation to update or revise any statements contained in this presentation, whether as a result of new information, future events or otherwise. In particular, you should not place any reliance on forwardlooking statements which speak only as of the date of this presentation. 37

38 SILTRONIC AG Hanns-Seidel-Platz Munich Germany Siltronic AG 2017