Thank you, Operator. Ladies and gentlemen, welcome to this quarterly conference call of X-FAB.

Representing X-FAB in this call are Alba Morganti, CFO of the group, and myself. In the first quarter of 2026, X-FAB generated revenues of $195.6 million, down 4% year on year and 12% quarter on quarter.

Excluding revenue recognized over time, quarterly revenue was $205.8 million, above the guided range. Our core markets, automotive, industrial, and medical, represented 94% of the total revenue, reaching $192.9 million.

Order intake amounted to $169.4 million, up 3% sequentially, while backlog stood at $308.4 million, reflecting the continued cautious ordering behavior in automotive rather than underlying end-market demand. Automotive revenue came in at $121.6 million, down 10% year on year.

Inventory adjustment and limited short-term visibility persisted, but the structural trend towards electrification, customization, and ADAS remains intact. Semiconductor content per vehicle continues to rise, driven by applications such as battery management, thermal regulation, and advanced sensing.

During the quarter, we secured multiple sensor element design wins, particularly in Asia and China, including gas, pressure, and acceleration sensors, as well as a new road noise cancellation application for electric vehicles. Our industrial business delivered $52.0 million, up 32% year on year, supported by strong silicon carbide demand and growing momentum in data center power management.

Medical revenue reached $19.2 million, up 39% year on year, with solid contributions from pacemaker, ultrasound, DNA sequencing, and contactless sensing, alongside new medical ultrasound opportunities from our 110-nanometer BCD-on-SOI technology. From a technology perspective, CMOS revenue was $156.9 million, impacted by automotive softness.

Nevertheless, we achieved design wins on our 180-nanometer and 110-nanometer BCD-on-SOI platforms, spanning data center and medical ultrasound applications. Our SPAD technology continued to gain traction across industrial, medical, and mobile markets, and interest in our next-generation 110-nanometer BCD platform for automotive sensors is confirmed from design wins by our top customer.

Our microsystem and photonics business delivered a record $33.7 million, up 42% year on year, driven by strong customer traction in diverse applications. For example, we successfully established aluminum scandium nitride-based piezo-MEMS production for inkjet printheads and saw growing customer engagement in MEMS resonators and ultrasonic transducers.

Finally, wide-bandgap revenue reached $15.1 million, up 152% year on year. Silicon carbide wafer shipments increased to 14,300 units, nearly tripling year on year.

This confirmed the strong customer pull in this technology. In GaN, we delivered the first 1,200-volt prototype on a 200-millimeter substrate and initiated a vertical GaN customer project supporting increased prototyping activity in 2026.

Overall, our technology pipeline, design win momentum, and diversification progress clearly position X-FAB for growth as market conditions normalize. Now, I will pass the word to Alba for the financial section.

Thank you, Damien. Good evening, ladies and gentlemen.

Now let's walk through the financial section. In the first quarter, our EBITDA was of $34.2 million, with an EBITDA margin of 17.5%.

Excluding the impact of revenue recognized over time, the EBITDA margin would have reached 18.4%, which would have been then within the guided range of 18% to 21%. As you could see, we had a significant reduction of the net sales due to an impact coming from the IFRS 15 revenue recognition over time in the first quarter of -$10.3 million.

This is the natural consequence of the expiration of most of our long-term agreements with some of our customers at the end of 2025. From 1st of January this year, we are now back to the usual business pre-LTA with these customers.

The expiration of these contracts triggered, according to the IFRS 15 rules, a significant reduction of the quarterly sales. Our net debt went from $285 million as of the end of Q4 2025 to $291 million at the end of Q1 this year, rather stable.

Meanwhile, we reimbursed $26.4 million prepayment of the LTAs in the first quarter, and our total debt decreased from $480.4 million as of the end of Q4 2025 to $436.1 million at the end of Q1 2026. In terms of profitability, our first quarter was primarily affected by softness in the automotive end market, which impacted on the overall revenue.

Given the substantial share of fixed costs, expenses could not reduce proportionally. The positive effects from the ongoing cost savings programs are not yet visible, but we anticipate them to become tangible by the end of 2026, including a headcount reduction in the high single-digit percentage range and a gradual decrease in operational expenditures.

Additionally, increased research and development activities during the first quarter led to higher than usual R&D costs. Cost structure is actively managed to protect profitability in the short term while maintaining the capabilities required to support future growth when volumes recover.

As our business is naturally hedged, which keeps our profitability unaffected by exchange rate fluctuations. At a constant U.S.

dollar-euro exchange rate of 1.05 as experienced in the previous year's quarter, the EBITDA margin would have been 0.9 percentage points lower. Our capex in Q1 were well in line with expectations and totaled $26.0 million.

Capex has significantly moderated as we move past the peak of our investment cycle, supporting cash generation and preserving financial flexibility. Cash and balance sheet discipline remain top priorities.

Cash and cash equivalents at the end of the first quarter totaled $144.7 million. To conclude this financial section, I would like to share our next quarter's guidance.

As automotive visibility remains limited in the near term, we reinforce our prudent guidance approach. We expect our Q2 2026 revenue to come in within the range of $190 million to $200 million, with an EBITDA margin in the range of 17% to 20%.

We anticipate a steady recovery of our automotive business in the second half of 2026. This guidance is based on an average exchange rate of 1.15 U.S.

dollar-euro and does not take into account the impact of IFRS 15. I would like to conclude this financial section by saying that we remain confident in the medium-term outlook.

Our strong operating leverage, diversified technology portfolio, and long-term customer relationship position us well to benefit from a recovery in demand. Now, I would like to give the word back to Damien.

Thank you, Alba. Let me start by reaffirming the three pillars that continue to guide X-FAB's strategy and execution: specialization, diversification, and disciplined execution.

These are not new priorities for us, but over the past quarter, we have taken several decisive steps to reinforce them, structurally, operationally, and commercially. On specialization and diversification, these are at the heart of the transformation we have just completed.

During the past quarter, we finalized a global reorganization of X-FAB around three dedicated business units, each focused on one of our core technology families. We have the smart CMOS and SOI BU, a microsystem and photonics one, and a wide-bandgap technology, including silicon carbide and gallium nitride.

These moves reflect a clear strategic intent. First, it allows us to accelerate the specialization of our technology portfolio by bringing development engineers, technology roadmaps, and business development much closer to our customers.

This proximity is critical to enable true co-creation, developing differentiated technologies together with customers and accelerating product ramp-up from R&D to volume manufacturing. In parallel, it strengthens accountability and focus within each technology family, ensuring that innovation is both market-driven and execution-oriented.

Second, these structures support our ambition to further diversify our market and customer portfolio. By aligning our organization around fast-growing end markets, such as electrification, digital healthcare, industrial automation, and AI-enabled infrastructure, we are better positioned to capture growth beyond traditional cycles and to serve customers with very different application needs and life cycles.

This diversification is already visible in an important customer mix evolution. During the past quarter, our top 20 customer ranking, representing around 75% of our revenues, changed meaningfully.

The share of our largest customer to our total revenue declined from 41% to 35% due to inventory corrections, but also due to the significant increase of sales generated by customers ranked from number 2 through 20. All together, they increased their revenue by 21% from Q4 '25 to Q1 '26.

This evolution is strategically important for X-FAB. It reflects the diversification of our business and the larger growth of our silicon carbide and microsystem businesses, as well as the continued success of highly differentiated X-FAB technologies in automotive applications, such as lighting and sensing.

We are also seeing continued momentum from our Chinese customers, particularly in the automotive segment, MEMS, battery monitoring systems, silicon carbide, and also for new applications like technologies for noise cancellation within the cabin. Turning to disciplined execution, operational excellence remains a top priority.

We continue to improve cycle times, yield, and quality, ensuring that our fabs remain competitive, resilient, and reliable partner for our customers, particularly in automotive, medical, and industrial applications, where quality and supply security are paramount. Finally, let me highlight the ongoing transformation of our Erfurt site, where we are accelerating the deployment of microsystems technologies.

This site plays a central role in our microsystem and photonics roadmap and is critical to supporting growth in medical, sensing, and next-generation industrial applications. To conclude, our commitment to innovation, strategic business development, and disciplined execution remained unwavering as we continue to build the sustainable long-term success of X-FAB for all stakeholders.

This concludes our Q1 result presentation. Operator, please open the lines for questions.

Yes, good afternoon, and thank you for taking my question. I just have a few.

The first one is on automotive, where you seem to be in a double dip configuration now with a second quarter of roughly -10% decline in your revenue year on year. This seems to track quite closely your number one client, Melexis.

I'd just like to know if you see a broad-based weakness in automotive, or is it primarily your number one client there? Then the second question is, do you see any signs in your order intake patterns that would highlight any potential inflection in the coming quarters?

We have book-to-bill that remains quite low, and your backlog keeps reducing. It's now 40% below peak.

I'm just wondering if you can give us any hints on how this will bottom out. I have a very quick follow-up housekeeping one afterwards.

Thank you.

All right, thank you for the question. On the first question, yeah, as I mentioned in the presentation, it is correct to say that the number one automotive customer reduced their demand quite a bit in Q1, and this is linked to somehow inventory management on their side.

At the same time, we saw for the other customers stabilization in general in automotive. If you zoom in on certain applications, we see some good strength, as I mentioned, in, for example, battery monitoring systems, and we see also some good strength in front lighting applications.

I would say there is a kind of a quarter correction from our number one customer managing their inventory, and there is some good stabilization and slight increase in certain application for automotive. Regarding the forecast from discussions with our customers, we see a recovery expected in the second half of the year, it's not going to be visible in Q2.

That's why we remain cautiously in Q2, but we see a sign of recovery in second half of the year. Regarding the backlog, you have to remember that our backlog is also impacted by the end-of-life that we made on our site in Erfurt.

This end-of-life continues to trigger orders on our site, but the visibility that we get from this end-of-life is directly there, but is not generating some good evolution of the booking overall, because all this business was already booked in the past. Does that answer the question?

That's very clear. Thank you very much.

Yes, it does, yeah. That's great.

Thank you very much for this. Just a quick housekeeping one for Alba.

Can you help us understand where your D&A is going to track for the remainder of the year and into next year, given your capex plans as they are presently? Where do you see D&A?

Thank you.

G&A, you said? Sorry?

Yeah.

Yeah?

Yes.

G&A is a bit a tricky one, especially this year, because we are implementing a new ERP. This year G&A is also impacted by the implementation of the new ERP, SAP, in our system.

Of course, the G&A costs are going up. We're facing some years of increased G&A.

If you looked at the evolution, you might have seen that already. This should go down then after the implementation of SAP.

We should be running in 2028, early 2028, we should start with our new ERP. Then, of course, the cost will significantly go down.

This is the meaning. Will peak

towards '28 and then go down from '28 onwards? Early 2028.

Yeah, 20- Yeah, of course, the cost will fluctuate a bit over the years. Now we have quite a lot of external cost that are normal in this phase.

Thank you very much.

You're welcome.

Yes, hello. Thanks for taking my questions.

I just had one on utilization across your footprint. Curious what you could give us a bit more sense around what that might be, the loading either by site or by technology.

I think that's the first question, will be very helpful already.

Utilization global is in the low 60s. We don't provide the utilization per site, but yeah, I think that was also linked to some messages that we provided in the past.

We have established additional capacity for the upcoming future, we are ready for the growth of our business. The low 60 is also an explanation on some levels that you see today in terms of cautiousness on profitability.

What I want to highlight is also that linked to this reduced loading that we see today in our factories, we are taking these actions to continuously monitor the necessary capacity, and we are idling some tools. We are making sure that the cost control in the factory is aligned with this limited utilization at this moment.

Low 60s is the number. All right.

I believe you talked about utilization for silicon carbide back in the Capital Markets Day in September. That was then at a rather lower level, but of course you've reported strong growth now in Q1.

Would you mind disclosing how that now is?

We are built quite some capacity in silicon carbide, we can run up to 10,000 wafer a month, and at this moment, we are right at the 60 60%, also in the low 60. We load around 6,000 wafers of silicon carbide in this available corridor.

There we want to make sure we are ready for the growth that we see quarter over quarter. It's a bit similar.

Great. Thank you.

On let's say AI-related data center power management, I was wondering what is really pulling you into that opportunities. Sort of the higher voltage and power density angle, or is more of a push for localized supply?

Is it simply a shortage of specialty capacity out there, or yeah, a bit more color here would be great.

I think it's a lot linked to the silicon carbide technology, we have engaged very, very early with different companies on silicon carbide. I think Navitas is a publicly known customer of X-FAB.

We see really a renewal of the interest of silicon carbide going from applications like a power switch for solid-state breakers, but also utilized in energy conversions from 8 800-volt to voltage down to 48, 12, or 6-volt. Silicon carbide drives a lot of this in terms of production.

Also the interest on GaN is for a portion linked to data center. I want to highlight also that the growth on data center is driving also some additional growth for other technologies, like, for example, our technologies used for timing clock to synchronize GPU in racks.

The idea is to reach really atomic clock precisions with the technology, and this is driven from a chip that was built out of X-FAB technology. Moving forward, we are also some design wins regarding high-voltage driver ICs to drive the power transistors.

There are multiple applications that are driving some growth on the data center, mostly for energy management, thermal management, but also timing management. The reason why we talk about AI and data center is also that we are also an activity on photonics, and in the photonics space, we see also some interest for application of our technologies, but there we are more in the development phase than in the revenue phase.

All right, thanks a lot. Then just a final question.

I think we've been reading about some foundries pushing further into power and specialty, right? Not only in China, but also outside China.

Also, been reading about some IDMs adding some analog capacity. Is that showing into some degree in your pricing, or actually on the contrary?

We've also been reading about pricing actually being increased, right, in certain mature node areas, yeah, how do you think about that?

We read the same press. We have seen also this articles about price increases in this area.

I think there is still a strong push on automation and silicon carbide for automation, where probably the price pressure is extreme. We try to stay on applications where the high voltage and customization that our customers are able to execute on our technology give us a certain advantage.

There is price pressure always everywhere, but I would say we try to stay in applications where this pressure is sustainable. I would not see any specific abnormal push towards price down or price up.

We see that more from an end application perspective, probably more pressure on automotive and a bit less pressure in industrial, data center, renewable, where we like to play.

All right, thanks a lot.

Welcome.

Hello, Damien. Hello, Alba.

Hello, Emmanuel.

Hello. Hello.

Some of my questions have already been answered, but I have still three questions to ask you. First, should we expect a reversal in demand for the industrial business as the positive effects of halting production of certain legacy technologies come to an end?

Second, can you confirm savings of $6 million by the fourth quarter? It's a figure I had in mind following the Q4 '25 earnings release.

Could you repeat what happened to R&D in Q1? It was up significantly, and I've been disconnected at the time of the call.

Is that structural, the new level of R&D spending, or just something specific happened to Q1? Thank you very much.

Thank you for the question. First question, reversal in demand in industrial.

No, in fact, we see significant increase in industrial for certain segments. Data center is there the biggest one.

I think across the industrial business in general, we see some growth that we have not seen in the past. Basically, the industrial business, if you look at it from a global perspective, is nicely recovery across the board, but with significant growth on data center.

I will answer the R&D question and let Alba answer the other question on the $6 million. On R&D, what we have done in Q1 is a specific effort to improve the quality and the robustness of certain technologies, so that has cost additional cost of mask and wafers.

We are also in the process of creating a second phase of 110-nanometer technology, BCD-on-SOI in France and BCD in Malaysia. This joint development that we have in France and Malaysia, are creating a phase of additional wafer requirements to qualify these phases.

This is not something that should prolonged. It's more linked to some specific record that we made regarding improvement of the robustness of our technologies.

You want to take the last one?

Emmanuel, indeed, we had a softening of the cost reduction effects or results visible. That's clear, because we are just at the end of Q1, and we put some measures that will take a bit longer to be visible, but we remain confident that our cost savings plan will materialize as expected by the end of the year.

Thank you very much.

Welcome.

Thank you. I see that of course in different parts of the business, medical, really growth, which is good to see.

However, if we look at the prototyping, I notice it stays always at the same level, or it's even weakened. Are we missing, or are we not able to really get to the customers to get more business there?

Because we still have to take into account after these big investments, normally should be able to double the volume and to double the sales figure, but I see that prototyping is lacking behind. There's no one-to-one relationship between prototyping and the sales of automotive, but if it is in the long run low, then I'm very concerned.

That's a good comment, and thank you for the question. If you look at our historical prototyping, there was a period where the levels were extremely high, the period from the year '20 to '23, yeah, '23 let's say, and that is linked to different effects.

We were under allocation. Is the echo gone?

Yeah. There was this effect of allocation, but also that during this phase, some of the pre-production that we had in microsystem and also in silicon carbide were assigned as prototypes.

We were doing pre-production, in reality, it was production of conditionally qualified material, and this was ranked as prototypes. If you look at the long-term curve, there is an anomaly.

I think that was already flagged in earlier calls. If you look at more the recent time, the last six quarter or five quarter, there has been some steady growth after a low level in Q1 2025.

Since then, the prototyping, the NREs of our CMOS kept increasing quarter over quarter, and Q1 this time is a bit lower versus Q4 last year, but if you compare quarter over quarter, the growth is there. This is definitely a KPI that we continue to monitor.

The fact that customer are coming back to us because they see that we have capacity, they see also operational performance improvement, is a good sign. What I would love to see is that this translate into a true quarter-over-quarter growth.

The point is, if you compare Q1 '26 with Q1 '25 from the NRE on the CMOS side, there is a significant growth. We will continue to monitor these things.

I think overall, the effort that we are doing in sales and the effort that we have done by the creation of the business unit will pay off, and my anticipation is that the level of prototyping will continue to increase. This is linked also to the interest that we see in our technology.

The BCD-over-SOI that we have in 180 and 110-nanometer is really gaining traction. The new technology that we are developing, a standard BCD on 110-nanometer, is also getting some interest from our major customer.

I would say it's a very good point. It's very good a KPI to monitor, but so far, if I look at the plan that we have for 2026, the Q1 results that we have on our prototype are according to our plan.

It's an important KPI. Thank you for asking the question.

I hope it answers your question, by the way.

Yeah. What is also a little bit of concern, of course, is the gross margin is also going down, or at least that's the impression that I have.

Is there anything happening on that, or is that just due to the fact of the elimination of the 10 million?

No, it's mostly driven by capacity and utilization, right? Right now, as I mentioned earlier, our utilization is in the low 60s.

We would be better to have a higher level of utilization. We are taking the actions to look at the loading of our factories, and that will naturally increase the gross margin of our products.

If I may complement, our cost base is rather a very high fixed cost base, and for the moment, we are rather 70% fixed cost versus 30% only variable cost.

Therefore,

yeah, our leverage, as Damien mentioned, is really with a higher utilization rate.

Can only be solved if the top line is improving, huh?

Yes.

That's what we need to get.

Not only.

It can be mitigated, Alba mentioned the cost optimization effort that we are doing. On all the sites, we are taking actions to adjust the different break-even points and the profitability at a lower utilization.

As Alba mentioned, these actions, they take time, right?

We should see some

positive results in the second half of this year from this cost optimization. The major effort is on loading.

Okay. It's of course when was first on getting all the new equipment in and getting all those things done, and now the focus really have to be on getting volume at the right margin and so on, so that we can benefit from the big investments, huh?

Absolutely.

Thank you.

Thank you. As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad.

Hi there, thanks for that. Yes, it's Trion from Berenberg.

Just had two last questions to ask. The first was just on the microsystems and photonics division, which you renamed from the previous MEMS.

Obviously, that's growing strongly. I just wondered if you could give us an idea of how much of that division is photonics rather than microsystems, and how much that might be contributing to growth.

Then the second question was just on the working capital. It was a small outflow, despite the fact you mentioned I think about $26 million of repayments to Melexis.

That sort of seems to suggest an underlying working capital improvement. I wonder if you could comment on that and whether that's sustainable going forward.

Thank you.

Thank you, Trion. I will take the first question.

Today, photonics is mostly development, on the revenue, it's all about NREs. We mentioned end of last year the importance of NREs that we got for photonics.

Microsystem without photonics broke end of last year the ceiling of $100 million. With photonics, I think we were in the range of $5 to $6 million NRE end of last year.

Sorry, photonics?

Photonics was $7 million.

7, yeah.

Oh, sorry, 7% of the total NRE of the group.

That's

5

that's 5.5

to 6.

Photonics is mostly NRE, and we anticipate product revenues from photonics to hit more around the end of '27, '28, not yet visible outside of NRE at this moment. The second question, I will let Alba answer on working capital.

Yeah. Hello, Trion, good to hear you.

For the repayment of the LTA prepayments, it was not only Melexis. Of course, largely they brought a large portion, but it was not only Melexis.

Anyway, yes, this is indeed the repayment we made in Q1. If you look at working capital, yeah, it improves indeed.

The fact that we reduced the capex significantly because we ended up with a quarter of a million, to say, only, compared to the high numbers we had in the last three years, of course helps a lot the working capital needs to get back to a normalized level.

Very clear. Thank you.

Thanks.

All right, I wanted to thank the audience. I want to thank you for participating to this press conference to this Q1 result.

I wanted to give you also an appointment for our second quarter result that are planned for July the 30th, 2026. Thank you, everyone.

Have a good day, a good evening, and speak to you soon.

Thank you. Goodbye.

Bye-bye.