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Picture: 123RF/SASHKIL7
Picture: 123RF/SASHKIL7

German semiconductor materials supplier Siltronic expects sales to stagnate this year after a 7% drop in 2024, it said on Tuesday, citing high inventory levels and driving its shares more than 15% lower.

Chip stocks have come under pressure as higher demand from AI has failed to make up for weak demand for automotive, PC and memory chips.

Concern about inflation and reduced demand has mounted after US President Donald Trump announced tariffs against Canada, China and Mexico, though he paused them for one month, except for China.

“For the year 2025, we anticipate that the growth in the end-markets, primarily driven by AI, will not yet be reflected in our wafer demand due to the persistently elevated inventory levels in the value chain,” CEO Michael Heckmeier said in a statement.

Silitronic shares, which lost about 47% last year, has fallen 15.1% by 9.15am GMT, putting them on track for their worst day since March 2020 if losses hold.

Siltronic, which makes silicon wafers used in semiconductor chips, expects the first half of 2025 to be weaker than the second half of 2024.

It said on Tuesday that wafer production for diameters up to 150mm in Burghausen would stop at the end of July with a slightly negative effect on sales and a negligible effect on earnings compared to the previous year.

The German company also said midterm targets would not be met by a 2028 deadline set previously. It did not give a new time frame.

“The weak guidance is another disappointment,” Stifel analyst Juergen Wagner said in a note, adding it could lead to a more than 20% revision to 2025 earnings per share forecasts.

Last week, STMicroelectronics, one of Europe’s largest chipmakers, said it was too early to give forecasts for 2025 as a downturn in its automotive and industrial markets continued.

Siltronic, which cut its dividend late on Monday, on Tuesday reported preliminary 2024 revenue of €1.41bn ($1.45bn), down from €1.51bn a year earlier.

That compared with expectations of €1.40bn, based on a poll by Vara Research.

Siltronic said it would give a more detailed outlook at the release of its annual report on March 6. 

Reuters

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