PARIS — In a press conference today (Feb. 28), André-Jacques Auberton-Hervé (in photograph), chairman and CEO of silicon-on-insulator (SOI) wafer supplier Soitec SA (Bernin, France), discussed the company’s anticipated loss for fiscal year 2007-2008, immediate measures, choice of scenario for fiscal year 2008-2009, starting in April, as well as the strategy for the short and medium term.

For the fourth quarter of fiscal year 2007-2008, Auberton-Hervé said Soitec expects that sales will decrease by 20 percent on a sequential basis. He commented: “A slowdown in the company’s activities will have a negative impact on the margins, resulting in a 3-percent operating loss of total sales for fiscal year 2007-2008. Total sales for the full year are expected to amount to 296 million euros. The second half of the year will be more stable than the first half.”

Actual demand from the company’s two main customers, namely Advanced Micro Devices, Inc. and IBM Corp., that is covered by the contractual minimum quantities is running behind schedule by around 14 percent. AMD, IBM, Freescale, NXP and Chartered Semiconductor Manufacturing account for 85 percent of Soitec’s business, indicated Auberton-Hervé.

In hopes of improving the situation, Auberton-Hervé has taken strategic initiatives and improvement actions. This follows the board’s decision that he takes over the company's day-to-day operational management after Pascal Mauberger’s dismissal.

The first objective consists of “a stricter control of production costs” and “a significant cost reduction of raw materials” as it represents 50 percent of the SOI wafer total production cost. Soitec indicates that strategic investments have been made as part of the existing investment in Singapore enabling the implementation of new processes dedicated to improving the efficient reuse of purchased silicon.

Soitec’s CEO also highlighted the launch of a program dedicated to operational excellence aiming at providing overall cost reductions and continuous improvement of operational efficiencies.

The third measure concerns Soitec’s R&D activities. “Our company is based on innovation. My request was that we focus on priority axes to satisfy the industry’s needs related to Moore’s law as well as the SOI Consortium’s deadlines and requests,” indicated Auberton-Hervé.

Besides Soitec’s R&D activities on advanced SOI technology development, the company will work on dynamic memories that no longer require capacitors, new transistor generations, LEDs for lighting applications and developments aligned with opportunities identified by the SOI Consortium.

For fiscal year 2008-2009, Auberton-Hervé said he remains “cautious and conservative” and has adopted a flat sales plan scenario, at constant exchange rate. Soitec said improved manufacturing efficiencies including cost reductions should result in better operating earnings performance, despite this scenario of flat sales on a like for like basis before the cost impact associated with the Singapore fab, estimated to be of the order of $30 million for the year.

Looking ahead, Auberton-Hervé said he remains confident in the industry’s wide adoption and eventual standardization of its material from 2009 onwards requiring additional capacity that justifies the need for the Singapore fab.

“It is not the first time Soitec has gone through a zone of turbulence,” commented Auberton-Hervé. “We built a 300-mm manufacturing site in the years 2001-2002 when the semiconductor industry was facing the worst crisis of its history. Our determination to assert leadership has enabled a strong growth. Our strategy is to remain the leader in the long term.”

Auberton-Hervé concluded: “Our visibility depends on our customers’ visibility. Existing and new players within the SOI Consortium support our strategy, and we expect a new wave of growth in 2010.”