Siltronic AG (OTCPK:SSLLF) Q3 2022 Earnings Conference Call October 28, 2022 4:00 AM ET
Company Participants
Rupert Krautbauer – Head of Investor Relations and Communications
Christoph Von Plotho – Chief Executive Officer
Rainer Irle – Chief Financial Officer
Conference Call Participants
Francois-Xavier Bouvignies – UBS Group AG
Amit Harchandani – Citigroup Inc.
Robert Sanders – Deutsche Bank
Adam Angelov – Bank of America Merrill Lynch
Jürgen Wagner – Stifel Financial Corp.
Operator
Good morning, ladies and gentlemen, and welcome to Siltronic’s Conference Call regarding its Q3 2022 Results. Please note that this call is being recorded and streamed on the Siltronic’s website. The call will be available as a replay later today. Your participation on this call implies your consent with this.
At this time, I would like to turn the conference over to Rupert Krautbauer, Head of Investor Relations and Communications of Siltronic AG. Please go ahead, sir.
Rupert Krautbauer
Thank you, operator, and welcome everybody to our Q3 results presentation. We do apologize for the technical issues we just experienced with the audio connections and we hope that everybody had a chance to dial-in by now. If not, and I will repeat this at the end of the call, please contact Siltronic’s IR for a follow-up, we will do our best to answer all your questions.
Now in today’s call, I am joined by our CEO, Dr. Christoph von Plotho; and our CFO, Rainer Irle. Following our usual procedure, Chris will start with some general remarks, and Rainer will provide some more detail of our key financials, followed by Chris again, updating you on our guidance and current market developments. After the introduction, we will be happy to take your questions.
Please note that management’s comments during this call will include forward-looking statements, which involve risks and uncertainties. For a discussion of risk factors, I encourage you to review the safe harbor statement contained in today’s press release and presentation and in our annual report. All documents relating to our Q3 reporting are available on our website.
I now hand over to Chris for introductory remarks.
Christoph Von Plotho
Thank you, Rupert. Welcome, everyone, and thank you for joining us our Q3 2022 results call. I hope all of you and your families are healthy and safe. I will present some highlights of our third quarter business, before Rainer will guide you through our KPI development in more detail. Q3 was another excellent quarter for Siltronic with sales reaching the new record high. Wafer demand continued to be high, and we benefited from a stronger U.S. dollar. Our operations also had an excellent performance with production output slightly above last quarters. The expansion projects in Singapore and Freiberg continue to proceed very well without any delays or interruptions.
We expect high loading for our 200 and 300 millimeter fabs to continue through Q4, despite some signs of weakness in some end markets, most importantly, smartphone and PC unit sales. As the U.S. dollar exchange rate against the euro is expected to stay strong. We raised our guidance for sales growth for this year to plus 26% to plus 30%. EBITDA margin is expected at 36% to 38% for the year 2022 at the upper end of our previous guidance.
The latest reports from electronics end markets still show a mixed picture with softening in some areas. Smartphone sales continued to decline. This is certainly not good news for anyone. But the impact to total silicon demand is somewhat softened by the continuing trends to more content for device. The situation in the automotive industry has not changed much as it is still recovering from supply chain issues. It is still unclear when supply can catch up with demand. And again, the trend for more electronic functionality per unit continues along with the growing share of electric vehicles.
Order for industrial electronics seems to be slowing, but builds and shipments continue to be strong. Computing demand show the very mixed picture. Server and cloud services continue to grow, while PC unit sales are down significantly. Demand for gaming consoles is still high. Many market forecasts emphasize the growing uncertainty due to macroeconomic and geopolitical developments along with ongoing correction for memory and some logic devices.
Looking at the impact on wafer demand, we see a mixed picture as well. Overall demand from our customers continued to be high for 200 and 300 millimeter wafers. However, demand for smaller diameter wafers is somewhat softer. We are very glad that both of our major expansion projects continue to proceed according to plan. This is the great achievement of our two project teams. The construction of our FabNext factory in Singapore is on track for first shipments to customers in the early part of 2024. This is made possible by an experienced team that works in great collaboration when our general contractor and the equipment makers.
Construction work for the crystal pulling hall in Freiberg is coming to a close and we have started to move the first equipment into the new building. Compared to Q2 2022, our sales grew by 7% to €474 million. Overall ASP in the quarter was significantly up compared to the second quarter 2022 due to favorable exchange rate and higher wafer prices. The main driver was the U.S. dollar to euro rate, which declined from US$1.07 per euro in Q2 to US$1.01 in Q3.
EBITDA came in at €171 million and EBIT increased to €124 million. CapEx of €226 million was mostly related to our major expansion projects, the construction of new fab for 300 millimeter in Singapore and the expansion of the crystal pulling hall and EPI in Freiberg. Our net financial assets were €553 million at the end of the third quarter, down from €573 million at the end of last year.
Now, I would like to hand over to Rainer to provide you with some more insights into our Q3 financials.
Rainer Irle
Thank you, Chris, and good morning. Sales increased quarter-on-quarter driven by the higher sales prices and the strong U.S. dollar. FX development was favorable with the Europe further depreciating from US$1.07 per euro in Q2 to US$1.01 in Q3. COGS increased further, largely due to the FX headwind as a significant share of our cost base is also U.S. and Singapore dollar.
Unit costs for electricity supplies and raw materials increased significantly year-over-year, but not further, quarter-on-quarter. Despite higher costs, our gross profit rose to €164 million in Q3, and gross margin came in at 34.6%. Currency effects were once more dominated by the stronger U.S. dollar, it has a positive impact on sales and margins with a [neutral non-operation of X] [ph] results in Q3. Please note that top and bottom line sensitivity to exchange rates has increased due to the lower exchange rate.
Favorable FX development and higher prices also led to an increase in EBITDA. EBITDA was up to €171 million in Q3, a 16% increase versus Q2. EBITDA margin increased to 36%. EBIT came in at €124 million for Q3, with an EBIT margin of 26% compared to 23% in Q2. EBITDA and EBIT in the first 3 quarters of this year or they exceed the full year results we had achieved last year.
Net profit was almost €110 million in Q3 more than 49% higher compared to Q3 last year, and up more than 20% quarter-on-quarter. EPS came in at €3.32 versus €2.66 in Q2. A dividend of €3 per share for 2021 was paid out in May. And we are planning to propose a dividend of another €3 per share for 2022 at the next AGM in May 2023. Working capital in Q3 increased by about €13 million quarter-on-quarter to €290 million basically in line with sales growth.
Looking at our balance sheet, equity grew further to almost €2 billion at the end of Q3 with an equity ratio of 57%. This increase is based on the strong profit as well as a decrease in pension obligations due to higher interest rates. The IFRS interest rate for pension provisions in Germany increased to 3.7% as of September versus 1.2% as of December 2021. The U.S. interest rate increased from 2.5% in December to 4.85% now. This resulted in our pension provision stabilizing at a much lower level than in previous years at €116 million.
Net financial assets remained high at €553 million. Financial assets grew to €922 million and financial debt to €368 million. Operating cash flow in Q3 was strong at $150 million. Cash flow for CapEx was comparable to Q2 at €226 million. This resulted in a negative cash flow, net cash flow of €64 million in Q3, as expected. So far, we have received about US$220 million of cash prepayment in 2022. We expect more prepayments in Q4 as well as in 2023 and in 2024.
CapEx in Q3 was €226 million most of the invest is used for the ongoing expansion projects, named the expansion of the 300 millimeter crystal pulling hall and EPI in Freiberg and, of course, FabNext in Singapore. For the full year 2022, we still expect CapEx of about €1.1 billion, with about two-thirds of this going into the FabNext project.
In addition, we adjusted our dividend policy to balance the cash flow throughout this investment phase. Capping the dividend at €3 provides additional liquidity for investments. At the same time, our shareholders will continue to participate adequately in the success of the company at an attractive return rate.
As mentioned before, we successfully issued an ESG-linked promissory low note or German [indiscernible] over €300 million at favorable conditions with terms of 5, 7 and 10 years. The interest rate on the promissory loan is linked to Sustainalytics Management Score of Siltronic.
Secondly, we secured a long-term loan in Singapore dollar with draw-down in 2022 and 2023. And, in addition, we just recently secured bilateral €200 million bank loan from the European Investment Bank, amortizing over 10 years. The loan will finance research and development in Germany as well as production capability for innovative products in our German factories. The draw-down is planned for the fourth quarter of this year.
And with that, I would like to hand back to Chris.
Christoph Von Plotho
Thank you, Rainer. Silicon wafer demand continues to grow and see any just reported new record shipments for the third quarter. Volume growth of 300 millimeter wafers has been very steady over more than a decade with the growth coming mostly from advanced applications. Therefore, we target to maintain our strong technology position by driving innovation and continuous improvements. 300 millimeter wafer supply has been soft and market growth this year is limited to a few percent due to the industry capacity. New capacity will only become available in early 2024 at a noticeable scale. This gives us confidence that the current uncertainty is just temporary, and that the timing for that next project is absolutely right.
Looking ahead at the remainder of this year and into next year, we still see a very mixed picture. Global news are dominated by uncertainty, geopolitical tensions and macroeconomic concerns. Some end markets have softened, and they are ongoing inventory correction for some semiconductor device types, like memory. While others are still high in demand, for example, chips for car electronics. Despite all this short-term uncertainty, we are convinced that the long-term drivers for our industry are still intact, there is no doubt that the semiconductor industry will continue to see growth in the mid- and long-term.
Based on our current visibility, we expect demand for our product to stay strong. Our main focus continues to be on a smooth execution in operations, our expansion project and cost control to counter inflation. A few months ago, there was a lot of uncertainty about gas supply in Germany, by now we have made very good progress with our project become independent of gas in our German sites. And we expect that we can run the project site with fuel oil instead of gas within the next month.
Furthermore, we are confident where sufficient supply of energy and gas at all our sites for the foreseeable future. Based on the continued strength of the U.S. dollar against the euro, we increase our guidance for sales in 2022 to plus 26% to plus 30%. Consequently, the expected EBITDA margin is adjusted to 36% to 38%. Everything else in our guidance for 2022 remains unchanged. Our guidance for cost increases in 2022 remains unchanged. We studied the new U.S. export rules and the impact to our China activities in great detail, however, so far without any negative implications.
Finally, just a few words on 2023. We expect the environment to be a little bit bumpy going into next year. We do expect further unit cost increase in 2023. However, we expect further tailwind from exchange rate.
With that, we close our presentation and we are now available for your question. Operator, please open the Q&A session.
Question-and-Answer Session
Operator
Thank you, sir. Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] Our first question is from Francois Bouvignies of UBS. Please go ahead.
Francois-Xavier Bouvignies
Hi, good morning. Can you hear me?
Christoph Von Plotho
Very well.
Francois-Xavier Bouvignies
Thank you. Thank you very much for taking my questions. The first one is on, Chris, the memory side of things. I mean, I’m sure you have seen the announcements from a number of players, I mean, Samsung, SK hynix and Micron, and their plan CapEx for next year and actually decreasing even the production next year. Now – you’re polishing the wafers, I mean, memory, my understanding, it’s a high exposure. So I’m just trying to figure out, when should we expect an impact? Or if you see any impact from this kind of change that we have seen in the last 3 to 5 months? Because when we look at the performance of 300 millimeter, it doesn’t seem that you see anything.
So now we should look at the past, we always experienced lag between what your customers are seeing, and what you finally see after, given the complexity of the supply chain, the impact on your business? So should we expect what we see on the memory side? The impact more into 2023, is it fair assumption? Or how can you not see anything at this stage would be helpful to know? Thank you.
Christoph Von Plotho
Well, very good question. We have the same information as you do. So we got some negative signals from the one or the other player mainly in the DRAM area of memory. Up to now, we do not see any impact on our business. In the past, we always talked about inventories that we see for 300 millimeter wafers at customers. And these inventory levels that we see are still completely fine. We do not see any, let’s say, up normal, uptrend in raw wafer inventory.
But like in the past, we need to say that we don’t see the inventory of finished goods, and we don’t see the development of inventory work in process. So there are some, let’s say, more negative news and positive news coming from the memory industry cut up to now this does not translate into wafer demand. And on the other hand, when you look at the announcement, which were made, whether it was out of Japan or North America, or Korea, it was about wafer sales, it was about demand. And nobody talked about purchasing less wafers.
You need to keep in mind that during the year 2022, up to now, 300 millimeter was a very, very short product. And there are no announcements for additional capacity before the early part of 2024. Therefore, I think, for our customers, it’s still very important to have the wafers that they need.
Francois-Xavier Bouvignies
That’s very clear, Chris. How can we understand these inventories are not going that much as you say, and – that you don’t see any impact on the memory side? At the same time, the memories, I think, like really downward pressure on the sales? I mean, where is it going? Then, I mean, what’s the gap? They must feel inventory, then if you don’t do anything on longevity. Do you have…
Christoph Von Plotho
No, it reminds me a little bit of situation in the later part of 2018, analysts and investors at that time were forcing us, why don’t you see anything. And the only thing that we said at that time, we don’t see anything that we read the same news as you do. And whether this will translate sooner or later into something negative for wafers needs to be seen, and this is relatively comparable to today. The differences that we have good reasons to believe based on the development that we had in the earlier part of 2022, that the inventory for raw wafers are more on the low side than on the high side. And, therefore, I wouldn’t be surprised that even if a company reduces wafers that they continue to buy, what the LTA obligations from.
Francois-Xavier Bouvignies
I see. Okay. Thank you, Chris. And how should we think about the pricing into next year? I mean, you’ve the new LTAs are kicking in the first quarter, if I remember correctly, which is usually the seasonality, so probably some help in there. But, what’s the outlook for pricing should we expect a significant increase like you experienced this year or more moderate – you should have, I guess, a good visibility given your LTAs. I just was wondering, how we should model or – this is the trend of the pricing side for next year.
Christoph Von Plotho
You need to keep in mind when we talk about ASP. We typically talk about ASP in euro. And ASP in euro was driven on one side by exchange rate development and pricing is both contributing quite a bit. So, I do not expect to have a comparable headwind – tailwind from currency. We will see some, we tend to believe that the euro will close at an average value for the year 2022 around 1.05. And if it stays where it is today, then we have a – and would see a €5 tailwind. The tailwind in this year was much more bigger. And, yes, we will see some price increases, if you say this year…
Francois-Xavier Bouvignies
Yeah.
Christoph Von Plotho
…basically will it be more moderate. I think more moderate is the right assumption.
Francois-Xavier Bouvignies
Right. Thank you very much.
Christoph Von Plotho
You’re welcome.
Operator
Thank you. The next question is from Amit Harchandani of Citi. Please go ahead.
Amit Harchandani
Thank you. Good morning, all. Amit Harchandani from Citi. Two questions, if I may. My first question, again, to continue on the previous questions is on the top-line growth, as we look into 2023 and beyond. By all accounts, we are entering a downward phase within the semiconductor cycle. You have talked about some factors which give you confidence including the lower levels of raw wafer inventory.
But can you comment a bit further on your earlier statement on current visibility about demand staying strong? Is it your conversations with customers? Is it the confidence that the LTAs won’t be breached? Is it something else that gives you? I guess, I’m trying to figure out how should we think about the resilience of your top-line this time versus what we have seen in previous cycles, you commented on late 2018? There have been a few more before that. So your thoughts on the topic would be much appreciated. And then I have a second question.
Christoph Von Plotho
Yeah. So, thank you for your question. It’s one question. It’s basically plenty of questions around the outlook for the years to come. So today is certainly not the year to give a detailed outlook about the future. Let me try to give you some insights. Typically, revenue development is always driven by two things, the quantity that you sell, and the price that you get. On prices, I already answered in the first question that we got today. That a more moderate approach compared to the current year is probably the right one to do for the year 2023.
On the other hand, for this year, we said we only expect for the industry low- to mid-single-digit growth, because there is no more capacity in the industry. And like I said in my speech, there won’t be any significant additional 300 millimeter capacity next year to the market. So, whatever demand will develop into, I do not believe that we and our competitors will have significant more quantity available. So this is basically information number one that quantity wise, we will not see a strong tailwind; and price wise, we will be moderate. I think this is the best approach that we can take today.
And if we look into mid- to long-term, its same old story, we tend to believe that the demand and the development for semiconductors is still intact. In many areas, not so much driven anymore by pieces produced or pieces sold, this is true for automotive, and for sure, also for smartphones, it’s much more driven by content changes. And also by shift from, let’s say, combustion engines to electric engines or hybrid cars. So there are many, many developments, which are in our favor.
And our assumption that we used for the decision making process for the investment into FabNext, where we said. In the average, we do foresee a 6% area growth for 300 millimeter. This is true. It will not happen every quarter. Sometimes it might be below, sometimes it will be up. But we do not have any reason to believe that this approach is not the right one for the future.
And, please keep in mind, we said that we secured roughly 80% of the most likely output during the run phase of FabNext with LTAs. Siltronic had the possibility to secure much more, but we didn’t want the risk to cover 100%, and even demand from customers was well beyond 100%. And so, all these indicators together, let’s say, it’s justify that we have quite a bit of confidence into the mid-to long-term future.
Amit Harchandani
Thank you, Chris. And maybe I’ll limit my second question then to a clarification on the LTA point, I said earlier, which is. Can you help us understand, what’s the wiggle room in the LTA for your customers? Can they delay volumes? Is there minimum committed volume or their pricing corridors? I guess, I’m trying to understand what’s the level of resilience that a greater share of LTAs can provide in this cycle versus previous cycles? Assuming, we end up in a situation where your customers do need to reduce the number of wafers they need to take from you.
Christoph Von Plotho
Well, like always predicting the future is always challenging, and also whether customers will fulfill the LTAs, yes or no. We do not have any indication that it will change compared to prior period. Maybe the one or the other customer will show up and try to talk about quantities to move quantities from earlier part of the LTA into a later part. This is something probably Siltronic will like in the parts listen to the challenges of the customer, but as soon as we talk about overall reduction of quantity or price adjustment. Our willingness to listen is there. Our willingness to react is completely underdeveloped.
Amit Harchandani
Understood. Thank you.
Christoph Von Plotho
You’re welcome.
Operator
Thank you. The next question is from Robert Sanders of Deutsche Bank. Please go ahead.
Robert Sanders
Yeah. Hi. I just had a question about chiplets, it seems like Apples quite keen to move to that architecture for its smartphones in a couple of years. And I think the assumption is all the mobile processor guys will follow. I was just wondering if you’ve done any work in terms of what that would mean for the square area per device, if you start to see more fragmentation of system-on-chips into multiple dies, some of which were used sort of the cutting- edge technology. And then I have follow-up. Thanks.
Christoph Von Plotho
Yeah, Rob, thank you for your question. This changes basically building our forecast.
Robert Sanders
Do you see it as a material event for the wafer industry? Or is it too minor to really move the needle?
Christoph Von Plotho
I think it’s simply part of the densification that we see – we saw in the past, we see today, and it will happen in the future. But it’s part of our forecast.
Robert Sanders
Got it. And just looking at the next year, I mean, in terms of utility prices, and all of that. Do you feel better about the situation into next year versus 3 months ago? I mean, the forward price seems to be dropping for utilities, et cetera. I was just wondering if you felt that that means you’re in a better position to negotiate, et cetera, and are you looking to lock in prices. Or are you still relatively exposed to the stock prices? Thank you.
Christoph Von Plotho
Yeah, Rob, the voice quality is not very good. But I think you were asking for utility pricing. So, I mean, it is coming down slowly. If you look at spot pricing is already down significantly. If you buy forwards for next year will still be very expensive. If you compare this year, next year, and over next year, you can obviously see how prices drop all from the forward, so kind of if you were to buy forwards today or over next year, you would still – you would already see a significant reduction.
We are obviously careful on buying forward into next year, because we don’t want to lock in the high pricing we see today. Comparing it to spot prices, we see that there’s enough room for additional decrease in the forward, so kind of – I mean, we will definitely see more increases next year, and then very likely, also a significant reduction in over next year.
Robert Sanders
Thank you.
Operator
Thank you very much. The next question is from Adam Angelov of Bank of America. Please go ahead.
Adam Angelov
Hi, thanks. I just had one question on prepayments, so they declined in the quarter, and you said earlier that you expect them to grow again in 2023, 2024. But, just curious, if you can help with some of the trajectory there, I think in the past, you said you’re expecting most coming in 2022, and then a little bit in 2023. So has anything changed on that?
And then, secondly, on the CapEx, you’ve capped there €1.1 billion guide, and that would imply quite a step up in Q4. So, I understand, you said everything is on track, which is wondering. Is that right? We should expect a significant step up in Q4, and maybe you can help us to understand why there wouldn’t be such a difference between the quarters? Thanks.
Christoph Von Plotho
Yeah. I mean, prepayments, there is basically no change, except maybe one or two additional contracts. We said the majority is coming this year, there’s more coming next year. Why does that – I mean, we didn’t get one in Q3, but there wouldn’t be one in Q4, more in 2023, and also a little more in 2024. That’s basically no change.
Yeah, in CapEx, I mean, there’s a lot of reasons why CapEx is always highest in Q4. But that’s kind of a trend you’ve seen also in prior years, so it’s quite a bit that is still coming in this year. A lot of that coming really very close to year end, and which will not necessarily then lead to a cash outflow, but it will be counted as CapEx in Q4.
Adam Angelov
Okay. Thank you.
Operator
Thank you very much. The next question is from Jürgen Wagner of Stifel. Please go ahead.
Jürgen Wagner
Yeah, good morning. Thank you for letting me on a follow-up on electricity prices. Is the message down a bit that we should expect an increase, let’s say, over the next 12-month, and then moderate down again later on? And looking at – second question looking at the share price being so low? We discussed that in the past at what level would you consider share buybacks instead of dividends? You mentioned you still want to pay the €3. Thank you.
Rainer Irle
Yeah, I mean, utility prices – I mean, just looking at the forward pricing, I can – I ‘m sure you do the proper modeling. I mean, we have some bought already for next year. But most of what we bought for next year, we bought already about a year ago at much lower prices. Now, if you look today, as it forward to next year. In Central Europe, they’re a little below €400, it’s still very high. If you buy today for over next year, you were somewhere between €250 and €300, so significantly lower. So if you were just locking in today, which we are not planning to do, but then you would see another significant increase in next year, and also a significant reduction over next year, basically down to levels of this year.
And, on the share buyback, I’m sure, we discussed that many times. There’s currently no intent. And if we were able to have an intent, we will let you know.
Jürgen Wagner
Okay. Thank you.
Operator
Thank you very much. The next question is a follow-up question from Amit Harchandani of Citi.
Amit Harchandani
Thank you for allowing me on. And if I could have 2 follow-up. My first question goes to the topic of geopolitics. And what’s happening between U.S. and China? Could you kindly clarify from your perspective today? What do you see as potential direct or indirect implications for your business? And then, I have a second question.
Christoph Von Plotho
Well, like I said, for the business, any implications today. But on the other side, we are fully aware that our decisions taken by the U.S. government, in order to, let’s say, take an influence on possible developments in China. And we can only judge of the starters of today, this might change tomorrow might become more severe and that it might have an impact. But, up to now, everything was related to leading edge in China, and leading edge in China does not exist so much, let’s put it that way. So, I think, the actions taken by the U.S. government are much more against equipment supplier than against wafer supplier. But we watch it carefully, and we will follow whatever is requested to do.
Amit Harchandani
Got it, Chris. And as a second question, if I may, probably a bit more strategic. There seems to be growing momentum around silicon carbide at this point of time. And in the past, you’ve talked about your views on silicon versus silicon carbide, and you’ve talked about your emphasis on gallium nitride. I just wondering if you’re revisiting that from a strategic standpoint, whether you see the opportunities compelling enough to accelerate your efforts, appreciate the chemistry is work differently, but it does seem like a long-term opportunity. And Siltronic does seem to be a company that could potentially be interested. So your thoughts on next generation power semis, and how are you thinking about decides, of course, your core silicon business? Thank you.
Christoph Von Plotho
So, very good question, Amit. People are talking very much about the development and always positive – with very positive comments on the silicon carbide business. The very positive impression is typically coming from growth rates and not from absolute figures. We looked at it twice and we came twice to the same conclusion. When we looked at it for the second time, you remember probably that we stopped it, because at that time, Siltronic was buying the deportivities [ph] the business which had €14 million, and they paid US€480 million for it. And consequently, there was a price check in the market and this is the price check of Siltronic does not want to follow.
And in the actual environment, we spend a lot of money in our FabNext, we concentrate of where we are good at and this is what we are going to continue to do. And by the way, in the meantime, there are also applications where silicon carbide is used, and there is a risk or even a very good chance, maybe even a guarantee that it will be replaced with gallium nitride. On silicon, for example, the on-board charger of the electric cars and hybrid cars, today they are based on silicon carbide. And the industry is convinced that in relatively short timeframe, it will move away from silicon carbide, because it’s simply too expensive.
Amit Harchandani
Okay. Got it. Thank you, Chris.
Christoph Von Plotho
You’re welcome.
Operator
Thank you very much. We have no further questions in the queue at this time, and then we’d like to hand back to Rupert Krautbauer for closing remarks.
Rupert Krautbauer
Thank you. So this concludes our Q&A session. Thank you for joining us today. We hope you will join us again for our full year results release in early March. And again, I would like to repeat our apologies for the technical issues we had at the beginning. If anyone joined the call later and did not have a chance to ask a question, please contact Siltronic IR and we’re happy to follow-up. Goodbye. Stay safe and healthy.
Operator
Thank you very much, sir. Ladies and gentlemen, the conference is now concluded, and you may disconnect your lines. Thank you for joining and have a pleasant day. Goodbye.
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