(new: details on AMS-Osram, Jefferies analyst on outlook)

HERZOGENRATH (dpa-AFX) - The chip industry supplier Aixtron expects at least significantly slower growth in 2024. According to experts, a sluggish e-car market will provide a headwind. For the coming year 2025, however, company CEO Felix Grawert expects a strong increase in earnings again, "driven by the next wave of growth in power electronics," according to a statement on Thursday. It remains to be seen whether the cancellation of a key LED project at customer AMS-Osram will thwart these plans. The news from AMS-Osram caused uncertainty on the stock market.

Aixtron shares were still down a good 14 percent at EUR 27.06 around midday, putting them in last place in the MDax. The 2024 share price loss thus grew to around 30 percent. However, investors can also look back on five consecutive years of profits with a total increase of around 360 percent.

In an initial reaction, one trader spoke of a rather gloomy business outlook. The news from AMS Osram also dampened the mood. The company trimmed its medium-term targets due to an unexpected cancellation of an order for an important LED project. As a result, the utilization possibilities of all assets belonging to this strategy are being questioned. The new 8-inch LED factory in Kulim, Malaysia, is also affected.

The cancellation of the project at AMS-Osram sends negative signals for the medium-term growth of the equipment supplier Aixtron, the trader explained. The high market expectations for 2025 and the following years are also based on the increasing use of MicroLEDs by consumer electronics suppliers. Now that a large group is refraining from doing so for the time being, the growth expectations for Aixtron appear too optimistic. According to Olivia Honychurch of Jefferies Research, the company in question is Apple.

However, the business with systems for MicroLED production still only accounts for a small part of Aixtron's business - around 11 percent in 2023. Nevertheless, experts actually expected these activities to grow in the coming years.

For 2024, Aixtron initially expects revenue to reach EUR 630 to 720 million, as the company announced in Herzogenrath on Thursday. Following a 36% increase in revenue to just under EUR 630 million in 2023, this would be an increase of a good 14% at best. The latest news from AMS-Osram has no impact on the forecast, said a spokeswoman. With a view to the following years, however, a first expert already sees headwinds.

The fact that the forecast range for 2024 is wider than usual in the past is probably also due to the increasing number of individual orders and uncertainty regarding export licenses, Jefferies expert Honychurch continued. Like other semiconductor companies, Aixtron had some problems with the latter in 2022 and 2023. This was due to staff shortages at the licensing authorities and a more critical view of technologies sold to Chinese customers by Western countries.

Earnings before interest and taxes are expected to account for around 24% to 26% of turnover in 2024. The analysts' estimate for turnover is in the upper half of the turnover range, while the operating profit margin is above the MDax group's target.

Last year, Aixtron achieved a margin of 25 percent, resulting in an operating profit of EUR 156.8 million. This was 50 percent more than in 2022, although analysts had hoped for slightly more. However, Aixtron spent significantly more money on research and development in 2023 in order to drive the company's future growth. In addition, ground was broken in the final quarter for the construction of an innovation center at the headquarters in Herzogenrath, which will cost a total of around EUR 100 million. On the bottom line, the company earned 145.2 million euros last year, 45% more than in 2022. The dividend is now set to increase by 0.09 cents to 0.40 euros per share.

With regard to the forecasts for the current year, analyst Madeleine Jenkins from the Swiss bank UBS recently warned against overly high expectations, partly because growth in the overall electric car market is slowing. She also referred in particular to electric car pioneer Tesla, which in January predicted a likely slower growth in deliveries for 2024 and sees the next wave of growth based on new platforms in 2025. This is important because Tesla is one of the largest consumers of silicon carbide chips and because it is a signal for the development of the electric car market as a whole.

In the previous year, however, Aixtron still benefited significantly from the expansion of capacity by chip companies and entered the new year with an order backlog for systems amounting to EUR 353.7 million. Customers are currently investing a lot of money in the production of modern chips. Electronic chips based on silicon carbide (SiC) are more energy-efficient and temperature-resistant than traditional silicon chips, which is a prerequisite for fast-charging technology for electric cars, for example. They also make it possible to build smaller batteries with the same range. High-voltage SiC components are also becoming more interesting with regard to the expansion of alternative energies.

However, power and high-frequency electronic chips based on gallium nitride (GaN) are also an issue. These have now replaced conventional silicon components in fast-charging power supply units for smartphones, for example. Further applications are likely to follow. "We are seeing increasing demand for applications in global data centers or solar systems," said Aixtron CEO Grawert in the fall./mis/la/he/men/lew/stk