(New: Management comments from analyst conference call, share price recovers after initial slide)

MUNICH (dpa-AFX) - Semiconductor wafer manufacturer Siltronic expects weak demand to continue in the coming months after a difficult first half. When it published its second-quarter financial figures on Thursday, the Wacker Chemical holding pointed to continued inventory corrections among chipmakers and their customers. Nevertheless, despite dismal demand and declining sales, Siltronic expects sales prices to remain stable.

With regard to the various customer groups, Siltronic CEO Michael Heckmeier explained in a conference call with analysts that memory chip manufacturers in particular had started reducing high inventories, in some cases quite late. As a result, the process in this area is likely to drag on until 2024. Meanwhile, producers of logic chips, who are also benefiting from the artificial intelligence trend, have made further progress. The situation for power semiconductors, which have to control high currents and voltages in electric cars and industry, looks more robust overall.

After initial losses of more than five percent, the shares recovered and were only just in the red at 75.90 euros in the late morning. This still represents an annual gain of more than eleven percent. Since a sharp slide in the share price in the first half of 2022, when a takeover by the Taiwanese company GlobalWafers failed due to resistance from the authorities and the current market weakness also became increasingly apparent, the share price has mainly hovered between 60 and 80 euros. The shares fluctuate strongly anyway, almost in step with the traditional ups and downs of the chip industry.

Overall, business development is now also easier to forecast, so that Siltronic's management is confident of a more concrete annual outlook. For 2023, it expects consolidated sales to be 14 to 19 percent below the previous year's figure of 1.8 billion euros. The earnings margin before interest, taxes, depreciation and amortization (Ebitda margin) is expected to reach 26 to 30 percent, after an extraordinarily strong good 37 percent in 2022. Previously, Heckmeier had only envisaged a significant decline in both key figures.

In the second quarter, the company met analysts' sales expectations, with a drop in earnings of around nine percent to just under 404 million euros compared to the same period last year. Compared with the first quarter of the year, sales remained virtually stable. Operating profit (Ebitda) of 118.6 million euros - down almost a fifth year-on-year and a good five percent on the previous quarter - exceeded the consensus estimate.

Despite the current chip slump, which in an environment of high inflation is also a result of people and companies being reluctant to buy smartphones, computers and other electronics, Siltronic remains confident about the longer term. The "increasing number of end-use applications based on megatrends such as artificial intelligence, digitalization and electromobility" means a medium- and long-term growth trend for silicon wafers, it said.

For this reason, Siltronic has been investing a lot of money in a new plant in Singapore for some time now; in addition, the production site in Freiberg, Saxony, has been expanded to include another drawing hall for silicon crystals. These crystals can then be used to produce hyperpure silicon wafers that Siltronic's customers can process into electronic chips.

For this reason, too, and due to higher prices, investments will continue to rise in 2023. Specifically, the company now plans to invest around 1.3 billion euros, compared with just under 1.1 billion euros in the previous year. In 2024, however, investments are to fall by more than half. As already announced, the new plant in Singapore is to start production at the beginning of 2024 and gradually ramp it up, depending on the development of demand./mis/jcf/zb/ngu