In the past few weeks, the indices of the DAX family have put on a year-end sprint that is worth seeing. The DAX and MDAX were able to gain about 9% in November and the SDAX was also in the green with a plus of more than 6%.

The Siltronic AG, represented in the SDAX, is also looking optimistically into the future. The management of the Munich-based company expects to achieve a significant increase in both turnover and earnings before interest, taxes and depreciation (EBITDA) by the 2028 financial year.

But before I tell you more about the medium-term planning of Siltronic AG, let me briefly introduce the company.

Siltronic AG in brief According to its own statements, Siltronic AG is one of the world’s leading producers of wafers made of pure silicon. Silicon wafers are the basis of the modern semiconductor industry and the basis for chips in all areas of electronics – from computers to smartphones to electric cars and wind turbines.

The Bavarian company is active worldwide and has production sites in Asia, Europe and the USA. Siltronic AG employs around 4,500 employees and has been listed in the Prime Standard of the German Stock Exchange since 2015. The shares of Siltronic AG are represented in the SDAX and TecDAX indices.

The medium-term growth plan until 2028 The management of Siltronic AG assumes in its current planning that turnover will increase to more than 2.2 billion euros by 2028 and the earnings before interest, taxes and depreciation (EBITDA margin) will reach a high 30 percent value.

Based on the value forecasted for the 2023 financial year, this represents a solid increase of more than 40%. The EBITDA margin is also expected to improve significantly compared to the 28 to 30% expected for the year 2023.

This optimistic planning until 2028 is based on the increasing relevance of global megatrends such as artificial intelligence (AI), digitization and electromobility. According to the Siltronic management, this will lead to a strong increase in the demand for semiconductors and thus also for wafers. Specifically, the company expects growth in wafer demand of 4 to 5% per year until at least 2028.

The increase in profitability (or the EBITDA margin) will be driven mainly by the expected volume growth and higher cost efficiency. In addition to the increasing demand for wafers, the productivity increase will also be supported by the company’s investments.

Thus, Siltronic has set up a new production site for 300 mm wafers in Singapore called FabNext, which went into operation in early November 2023. Given the high level of automation and efficient cost structure, Siltronic is targeting EBITDA margins of more than 50% for FabNext in the medium term.

The Siltronic share has gained around 22% this year, but still has around 72% to go to reach the old highs of around 145 Euro. If the medium-term plan works out, further price gains could be on the cards.