Stock Analysis & Valuation Siltronic AG (WAF.SW)

• Previous Close: CHF71.78
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	54.80	-24
Graham Formula	3.60	-95

Strategic Investment Analysis

Company Overview

Siltronic AG (WAF.SW) is a leading global manufacturer of hyperpure silicon wafers for the semiconductor industry, headquartered in Munich, Germany. Specializing in polished and epitaxial wafers with diameters up to 300 mm, Siltronic serves high-growth markets including computing, automotive, industrial automation, and renewable energy. The company’s advanced wafer products, such as Ultimate Silicon, PowerFZ, and HIREF, are critical components in semiconductors used in smartphones, electric vehicles, sensors, and wind turbines. With a legacy dating back to 1953, Siltronic operates at the forefront of semiconductor material innovation, supplying key players in the global tech supply chain. Listed on the Swiss Exchange (SIX), the company plays a pivotal role in the Industrials sector, particularly in semiconductor manufacturing infrastructure. Its strategic positioning in Europe and Asia ensures resilience in a highly cyclical industry.

Investment Summary

Siltronic AG presents a high-beta (1.594) investment opportunity tied to semiconductor industry cycles. While its €2.15B market cap and €1.41B revenue reflect strong industry positioning, investors should note significant capital expenditures (-€699.9M) and elevated debt (€1.52B). The company’s €344.5M operating cash flow and €1.18 dividend per share offer income potential, but cyclical demand and heavy reinvestment needs pose risks. Long-term growth depends on sustained semiconductor demand, particularly in automotive and IoT applications.

Competitive Analysis

Siltronic competes in the capital-intensive semiconductor wafer market, where scale, technological edge, and customer relationships determine success. Its 300mm wafer capability and specialized products (PowerFZ, HIREF) provide differentiation against commoditized smaller-diameter wafers. However, the company faces pricing pressure from Asian competitors and depends on a concentrated customer base. Its Munich R&D center and joint ventures (e.g., with GlobalWafers in Singapore) enhance technological moats, but high debt limits financial flexibility versus better-capitalized peers. Geographic diversification (manufacturing in Germany, Singapore) mitigates supply chain risks but exposes it to EU regulatory costs. The 2021 failed acquisition by GlobalWafers due to German government intervention highlights geopolitical sensitivities in this strategic industry.

Major Competitors

• Sumco Corporation (SUMCO): Sumco is the world’s second-largest silicon wafer producer with strong 300mm wafer capacity. It benefits from proximity to Asian semiconductor fabs but has lower EU market penetration than Siltronic. Sumco’s vertical integration with polysilicon suppliers provides cost advantages, but its product mix is less specialized in epitaxial wafers.
• GlobalWafers Co., Ltd. (3532.TW): The third-largest player globally, GlobalWafers nearly acquired Siltronic in 2021. Its aggressive expansion in 300mm wafers and MEMS applications challenges Siltronic’s tech leadership. Strong balance sheet allows higher capex, but European market reliance on Siltronic limits its regional share.
• Shin-Etsu Chemical Co., Ltd. (SHWAT): The market leader with 30%+ global share, Shin-Etsu dominates in both wafer quality and cost efficiency due to in-house polysilicon production. Its scale dwarfs Siltronic’s, but focus on photolithography wafers creates niche opportunities for Siltronic in power semiconductors.
• SkyWater Technology (SKYT): A smaller but agile US-based foundry service provider that vertically integrates wafer production. Competes indirectly with Siltronic in specialty wafers for defense/aerospace, but lacks 300mm capabilities. Benefits from US CHIPS Act funding.