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Hi all, ST Micro had strong Q4 results today and a solid guidance for 2020, stock +6% I think. I posted a lot from the conf call with management below that provides FANTASTIC read-x for Aixtron:
1. They raised their capex budget from 1.17bn to 1.5bn (+28%) which caused a lot of focus in the call, seems this was unexpected. From reading the transcript I get the feeling that they are accelerating some of their innovation/new products, meaning they need to invest more (among others in GAN) which should help Aixtron. 2. STM is extremely active in SIC and GAN. GAN seems to be progressing ahead quite quickly for them (though not commercial yet), meaning Aixtron might get some orders here as well in 2020 (new to me). SIC clearly has momentum with increasing customers, seems that it is now consensus that the technology will become standard (was unsure until 1-2 years ago, I think). 3. VCSEL seems to be coming to the world side now and STM is clearly positive for Smartphones in 2020, that means overcapacity in the industry (see IQE) should reduce and capacity utilisation increase. I think Aixtron guided to potentially some VCSEL orders in H2-20 which is supported by these comments below. Regards, Fel
Capex at 1.5bn vs. 1.17bn in 2019
This segment includes the addition of capacity for some of our existing -- exiting -- existing, sorry technologies and investment and mix evolution for our [ph]200-millimeter fab. It will also support the (inaudible) activities and the maintenance required by our manufacturing operations and infrastructure. This also include about $400 million of investments of strategic initiative, continued investments in our new (inaudible) 300-millimeter fab that will suppport growth in [ph]BCG IGBT and also power technologies. R&D for gallium nitride power technologies and production (inaudible) gallium nitride for RF devices and investment for silicon carbide. These include substrate activities
following the acquisition of (inaudible). They also support our plans to establish internal manufacturing of 150-millimeter wafer and drive evolution to 200-millimeter wafer.
They also seem to be investing in VCSEL worldside-phone Equipment, if i can decipher this correctly, here a quote from the call: "So this is the case for the CapEx. About our [ph]sound store clearly HT First of all, do you like Time of Flight for ranging from so (inaudible) support and so and so forth, so we continue to grow and basically we address all the smartphone player. About [ph]DIPMET phone size, ST really will continue to act as a leader to address phone spacing, face recognition both for structured light and order of technology, if they are requested and ST is also a key player for the rear facing, so we develop strong codec in technology to address the wall facing and back to your side of the
smartphone. And we do expect to start to grow on this business starting next year." In response to another question on Capex: So we must retail offsets. But then so go into, it is a initiative on the gallium-nitride both for our energy control strategy, because again ST starting two years from now, we have totally completed our position to advise this market, we I repeat, high voltage [ph]PowerMOS, low voltage [ph]PowerMOS, IGBT, silicon carbide MOSFETs and soon gallium-nitride MOSFET. So we have the full spectrum of technology package and module to act as a leader on this market and [ph]cut the megatrend.
On GAN: It's very technical question, (inaudible) by next year, we expect to start to generate revenue starts in 2021. For [ph]device what is clear that why again it is so important in our technology portfolio is because each time you need to have to exceed the second C and you need to work for a while again is a good answer. For -- whatever is on [ph]charger of Automotive all or just kind of device Sharjah where you need to go fast and with IFO well as this technology is great.
Well, and silicon carbide, silicon carbide is a key success factor each time you go to a very high point. As an example, to move to 850V to have a very fast to charger and to optimize the battery and the --, silicon carbide is mandatory and is a killer in front of the IGBT. So this is a breakdown. Well, clearly thoughtful gallium, we are developing the technology, we are in the high-end with initiatives that I cannot disclose now because it's confidential for the time being.
And -- but clearly this initiative have to boost our positioning on this device using GaN. And we expect it will contribute to our three years' plan, well $12 billion holdings.
On SIC: Okay. This is Mark, who would like to give you a little bit more color on the silicon carbide. So we are in this moment engaged in 50 projects, we've 26, with 26 customers. And lastly, this is a 50% with automotive customers and 50% with industrial customers. So this is just showing you that our pipeline of opportunities expansion of opportunities in silicon carbide keep accelerating and we are extremely well positioned there.
However, still about 80% of revenue in Automotive SIC is generated by 1 customer (my guess is Tesla), the comment from Management on that question: (inaudible) this year is still our main automotive customer because you know that also, let's say electrical car, Phase 1 there is a [ph]move more on the IGBT. So, it is clear that for us, still is main revenue contributor is our main customer. Moving to a three-year [ph]origin we clearly believe that the contribution from this customer will account for above -- about 50% of total [ph]seek revenues. And thanks to [ph]see if you can growth with other automotive and industrial customer. So it means we will stop. Okay. To have contribution from the other one next year.
More on SIC: Between automotive and industrial is totally consistent in term of funnel of opportunities for ST to sustain our objective 30% market share of this business and achieve by 2025 minimum $1 billion of revenue expected from this MOSFET on silicon carbide and clearly that's the reason why in order to secure short midterm our circulation, we have increased our agreement with Cree. And we have agreed strategic agreement with (inaudible). In parallel, as many time shared with you, we have invested in Norstel, European based raw material provider to develop an internal supply chain and we will decide [ph]finally what will be the weight of this internal supply chain. But more important, this internal supply chain will be also a driver -- a key driver of [ph]LNG. So (inaudible) 200-millimeter and for sure a key driver to improve ourself in term of yield efficiency and productivity for the raw material. So at the end, to support our $1 billion target by 2025, we will have well spread and balanced supply chain between two key player Cree and SICRYSTAL
and [ph]one internal one to secure our supply from Europe and driving our (inaudible) and conversion to 200-millimeter. So this is our strategy on silicon carbide.
Smartphone Outlook for 2020, should reduce the VCSEL overcapacity in the market: So about smartphone, as you know, 2019 still was an year with a number of the smartphone decline year-over-year. 2020, the expectation is that the smartphone are going to increase again leveraging on the introduction of the 5G smartphones coming to the market. So there will be an increase of the number of [ph]forms, with an increase of our [ph]ASPD inside forms. On top of that for the Chinese smartphone maker was asking, we are leveraging of course on the leadership position that we do have, for example, on the wireless charging on MEMS and we are expected to be in market share in those sets.
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