Soitec, a leading technology company specializing in advanced materials and innovative solutions, has reported second-quarter revenue that surpassed expectations. However, the company’s performance in the first half of the year reflects a significant downturn across key end markets, with warnings that conditions are likely to remain challenging throughout the remainder of the fiscal year.
Q2 Revenue Performance
The company’s second-quarter revenue came in at €139 million, marking a decline of 36% from the same period last year on both a reported and organic basis. Although this may seem alarming, it is worth noting that the quarterly revenue increase by 47% sequentially, meeting the guidance provided earlier in July. This performance indicates that Soitec’s efforts to adapt to market conditions are starting to yield some positive results.
Shifts in Key Markets
One of the most notable aspects of Soitec’s Q2 performance is the divergence between its various business segments. While Edge & Cloud AI displayed strong momentum, registering stable organic growth driven by increases in Photonics-SOI and FD-SOI offsetting planned phase-outs in Imager-SOI, both Mobile Communications and Automotive & Industrial faced ongoing challenges.
Mobile Communications saw a 30% organic decline largely due to RF-SOI inventory digestion that has plagued the sector for some time. In contrast, Automotive & Industrial declined by an even more substantial 74%, weighed down by excess inventories coupled with the soft automotive market’s diminished purchasing power. The company, while acknowledging progress in these challenging sectors, emphasized ongoing difficulties.
Chief Executive’s Reflections
Chief executive Pierre Barnabé offered insightful commentary on Q2’26 performance: "Q2’26 performance was in line with our expectations and reflects the dynamics of the first half – strong momentum in Edge & Cloud AI, continued inventory correction in Mobile Communications, and a lacklustre Automotive market." When asked to outline expectations and potential outcomes for H1’25 compared with these H1’26 figures, he added, "In these uncertain times, financial discipline is of the essence as evidenced by H1’26 numbers."
Financial Performance
The Q2 EBITDA came in at €79 million, marking a decline of 30% when compared to the same period last year. However, despite the decrease in revenue and EBITDA from H1’25 figures, Soitec was able to improve its operating profit margin slightly to 34.1%. Free cash flow turned negative due to lower profitability along with higher operational outlays.
Outlook for Q3
When inquiring about future prospects, Soitec forecasts an increase of mid-to-high single-digit organic revenue growth compared to the previous quarter, although market conditions remain challenging – highlighted particularly by Mobile Communications and Automotive & Industrial facing ongoing difficulties.
