Siltronic, a chip parts provider, sees a drop in profits due to excessive client stockpiles

Siltronic, a German chip equipment supplier, reported a 27.5% drop in first-quarter core earnings on Thursday, a week after cutting annual targets due to clients’ relatively large inventory levels.

Siltronic (WAFGn.DE), a German chip equipment supplier, announced a 27.5% reduction in first-quarter core earnings on Thursday, a week after lowering yearly objectives due to clients’ relatively high inventory.

The company, which manufactures silicon wafers for semiconductor chips, reported quarterly earnings before interest, tax, depreciation, and amortization (EBITDA) of 90.8 million euros ($97.3 million), a decrease from 125.2 million euros a year ago.

Its sales plummeted 15% to 343.5 million euros during the same period.

“The start of the year has been marked by low demand due to rising inventory at our customers. “It is still impossible to predict when inventories will return to normal,” CEO Michael Heckmeier said in a statement.

As a result, 2024 will most likely be a transition year for Siltronic as it moves toward profitable development, he noted.

The company stated that, while demand for wafers was improving in the end markets, customers’ slower-than-expected inventory reductions would continue to have an impact throughout the year.

Siltronic lowered its 2024 projection last week, predicting 2024 revenues to be around 10% lower than last year, with full-year EBITDA expected to be less than 300 million euros.

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