Key Highlights
- Soitec shares climbed as high as 15.1% following the company’s decision to boost its fiscal Q2 2027 revenue growth projection to approximately 50% year-over-year, a significant increase from the previous 30% estimate.
- The revised forecast stems from rapidly expanding demand for Photonics-SOI wafers, which are critical components in optical networking for AI-powered data centers.
- The French semiconductor materials firm anticipates Q2’27 Photonics-SOI sales to reach approximately triple the Q2’26 figure of about $25 million.
- Management is securing long-term capacity reservation contracts with customers that include deposit requirements and locked-in pricing structures.
- With an estimated 95% share of the silicon photonics substrate market, Soitec doesn’t foresee requiring a new manufacturing facility until approximately 2029.
Soitec stock experienced a notable surge of up to 15.1% on Thursday following the French semiconductor materials producer’s announcement that it was raising its second-quarter revenue growth projection to roughly 50% year-over-year on a constant currency basis, a substantial jump from its earlier guidance exceeding 30%.
According to the company’s statement, the enhanced outlook is attributed to rapidly increasing demand for its Photonics-SOI wafer products, improved clarity regarding immediate customer requirements, and the firm’s capability to rapidly adjust production capacity.
The company’s updated projections indicate that Photonics-SOI revenue during Q2 of fiscal 2027 should reach approximately three times the comparable quarter in fiscal 2026, which stood at roughly $25 million. Looking at the first half of fiscal 2027, the company anticipates revenue to be about 2.3 times the first-half fiscal 2026 figure of approximately $50 million.
For the complete fiscal year 2027, Soitec’s guidance places Photonics-SOI revenue somewhere between 2.5 and 3 times the fiscal 2026 total, which exceeded $100 million. Chief Executive Laurent Remont has characterized the resulting $200 million-plus projection as “absolutely a floor,” emphasizing it represents a minimum rather than a maximum expectation.
The company’s other business segments remain essentially stable. Soitec recorded total sales of approximately €600 million during fiscal 2025-2026.
Securing Long-Term Customer Commitments
Soitec is taking proactive measures rather than adopting a passive approach. The organization is actively negotiating multi-year Capacity Reservation Agreements with photonics clients, with approximately 80% of these contracts anticipated to be finalized within the next one to two weeks.
These contracts mandate that customers provide deposits linked to their committed purchase volumes. Should customers fulfill their volume commitments, they receive their deposits back. Failure to meet commitments results in deposit forfeiture. Any volumes exceeding the agreed-upon levels trigger new pricing negotiations.
“That’s a way for us to have our customer with skin in the game,” Remont told Reuters.
Additionally, customers must provide inventory data, a strategic requirement intended to discourage excessive ordering aimed at restricting supply availability to competitors.
The company anticipates finalizing agreements with eight out of approximately 10 primary customers in the upcoming weeks.
Production Expansion Strategy Without Immediate New Factory
Silicon photonics demand has experienced dramatic growth as cloud computing giants transition to optical connectivity solutions within AI infrastructure, where traditional copper connections are being phased out due to power consumption and performance limitations.
Soitec provides the substrate material that forms the foundation for nearly all silicon photonics chips. UBS analysts place the company’s market share at approximately 95%. The company’s stock value has nearly quadrupled throughout this year.
Management doesn’t anticipate requiring a new production facility until around 2029. Meanwhile, the company is employing two primary strategies: reallocating production between different product lines using shared manufacturing facilities, and installing additional equipment within existing cleanroom infrastructure.
Until five months ago, Soitec manufactured Photonics-SOI wafers exclusively in France. The company has subsequently certified a Singapore-based facility for production.
A third alternative involves an existing but currently unequipped building in Singapore, which could be outfitted with manufacturing equipment rather than constructing an entirely new fabrication plant. Management expects to make a determination on this option within the next six to 12 months.
Remont indicated there is no requirement for a U.S.-based manufacturing plant “at this stage,” noting that customers are “more desperate to get wafers than being too picky about where the location for production is.”
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