Soitec: SiPho growth unlikely to fully offset the Mobile trough; JPMorgan maintains Neutral and lowers target price

Overview

This report is JPMorgan's company research and rating adjustment report on Soitec. The core conclusion is that although Soitec's share price has fallen sharply from its year-to-date high, JPMorgan still does not view it as a clear medium-term buying opportunity. While SiPho and Edge & Cloud AI offer growth opportunities with room for upward revisions, the Mobile Communications trough is deeper and the recovery shallower, Auto & Industrial remains weighed down by inventory, and group gross-margin recovery is also slower than market expectations.

Core views

JPMorgan maintains its Neutral rating on Soitec and lowers its Dec-27 target price from €130 to €92. The report believes the company is in a phase of operating at “two speeds”: SiPho revenue is growing rapidly, driven by demand for optical modules, CPO, and AI infrastructure; however, Mobile Communications, RF-SOI, and Auto & Industrial are growing slowly or remain under pressure. JPMorgan's FY27, FY28, and FY29 group forecasts are respectively 4%, 6%, and 3% below the latest consensus. It believes the current share price reflects considerable SiPho optimism but does not yet fully reflect downside risks to the core Mobile business.

Analysis framework

The report uses segment forecasts, consensus comparisons, valuation multiples, and analysis of key operating drivers. JPMorgan assesses SiPho market penetration, CPO ramp-up, the impact of long-term supply agreement pricing, changes in Soitec's market share, mobile handset demand, the RF-SOI inventory cycle, Auto & Industrial customer inventories, the gross-margin bridge, and peer EV/EBITDA valuation ranges, ultimately deriving the target price using an 11.0x multiple of FY29e EBITDA.

Methodology notes

• Valuation methodsEV/EBITDA multiple

  Value the company by multiplying FY29e EBITDA by the target multiple

  JPMorgan sets Soitec's target price at €92 based on 11.0x FY29e EBITDA, below the previous 15.0x multiple, but still representing an approximately 10% premium to the approximately 10x average two-year-forward EBITDA multiple over the past five years.

• ForecastingSegment forecast and consensus comparison

  Forecast individual businesses and compare them with Vara consensus

  The report breaks down SiPho, Mobile Communications, Auto & Industrial, and other businesses, comparing JPMorgan's forecasts with market consensus to assess whether the share price fully reflects upside and downside risks.

• Operating analysisGross margin bridge

  Gross-margin bridge analysis

  The report explains why gross-margin recovery is slower than consensus based on fixed costs and depreciation, product mix and pricing, foreign exchange, bare-wafer prices, licensing revenue, and inventory write-downs.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Soitec / SOIT.PA

  Covered company

  Strengths

  Rapid SiPho growth, with CPO potentially becoming the next-stage growth driver after 2028; management is placing greater emphasis on pricing discipline, working capital, and capital allocation; medium-term free cash flow has room to improve.

  Weaknesses

  Mobile Communications has a high revenue share but faces significant demand and inventory pressure; RF-SOI faces pricing and market-share risks; Auto & Industrial inventories remain elevated; gross-margin recovery is slower than consensus.

  Comparison

  Valuation uses 11.0x FY29e EBITDA, at the high end of the wafer-manufacturing peer range and representing an approximately 10% premium to Soitec's approximately 10x five-year average multiple.

  Risks

  SiPho execution falls short of expectations, competitors such as Global Wafers take market share, the Mobile inventory cycle is prolonged, and gross-margin and free-cash-flow improvement falls below expectations.

• Global Wafers

  Key competitor

  Strengths

  Has developed SOI technology independent of Soitec's patents and has 300mm SOI capacity in Missouri; the report considers it a significant competitive threat in SiPho and RF-SOI.

  Weaknesses

  The report does not provide definitive information on its capacity allocation between Photonics and RF-SOI.

  Comparison

  JPMorgan believes Soitec's current SiPho market share is close to 100%, but it could decline to approximately 80% by FY30 as competitors such as Global Wafers enter the market.

  Risks

  If Global Wafers expands capacity or customer qualification progresses faster than expected, Soitec's pricing, market share, and margins could come under pressure.

Key data

• RatingNeutralThe report maintains its Neutral rating.
• Target price€92.00Dec-27 target price, previously €130.00.
• Current price€98.16Price date: 2026-07-07.
• SiPho revenue forecastApproximately €535m in FY30; approximately 50% FY25-30e CAGRJPMorgan considers SiPho an important growth engine for Soitec.
• SiPho market-share assumptionApproximately 80% in FY30The report assumes Soitec's share declines from nearly 100% after competition intensifies.
• Mobile Communications revenue shareApproximately 52% in FY26The business remains Soitec's largest segment.
• Handset shipment forecast-16% in 2026; -3% in 2027JPMorgan lowered its handset-market assumptions to reflect reports of production cuts by China-related manufacturers.
• Mobile business versus consensus14%-17% below consensus in FY27-29Primarily driven by prolonged RF-SOI inventory digestion, weak demand, and the risk of market-share losses.
• Group forecast adjustmentsFY27/FY28/FY29 revenue forecasts adjusted by -4%/-9%/-3%, respectivelyThe reductions primarily come from Mobile and Auto & Industrial.
• FY29 gross-margin forecast30.2%Below consensus at 32.2%; the report considers the gross-margin recovery path shallower.
• Valuation multiple11.0x FY29e EBITDAThe previous target price used 15.0x FY29e EBITDA.
• Key FY27/FY28 financial forecastsRevenue €603m/€748m; Adj. EBITDA €131m/€189mFrom the report's Key Metrics table.

Impact & implications

The report's investment conclusion is broadly balanced. SiPho, CPO, and AI infrastructure demand provide Soitec with a strong medium-term growth narrative, while Edge & Cloud AI also carries upside revision risk, so a significant underweight is not warranted. However, the core Mobile business, RF-SOI pricing and market share, customer inventories, and gross-margin recovery all face downside risks. Since the current valuation already largely reflects the SiPho opportunity, JPMorgan considers maintaining Neutral more appropriate.

Risks

• SiPho growth or CPO customer ramp-up execution falls below expectations.
• Competitors such as Global Wafers cause SiPho or RF-SOI market-share losses to occur faster than expected.
• End-market demand in Mobile Communications is weaker than expected, with RF-SOI inventory digestion extending into FY28 or longer.
• Auto & Industrial customer inventories remain elevated, preventing restocking benefits from flowing through to Soitec.
• Pricing pressure, foreign exchange, fixed costs, and depreciation cause gross-margin recovery to lag expectations.
• Measures to improve working capital could harm revenue, market share, or profitability.

What to watch

• Whether SiPho revenue can exceed €500m and approach JPMorgan's €535m forecast by FY30.
• Customer adoption and volume-production ramp-up of CPO from 2028 onward.
• The pace of RF-SOI channel inventory digestion, pricing discipline, and market-share changes.
• Changes in the mobile handset market's shipments during 2026-2027.
• Auto & Industrial customer inventory days and whether IDM restocking flows through to the wafer supply chain.
• Whether gross-margin recovery in FY27 and FY28 is below or above consensus.
• Disclosures surrounding the results of CEO Remont's portfolio review around H1’27.
• Whether incubation projects related to POI, memory, or quantum computing secure high-volume customers or gain greater market recognition.