BUZZ-Berenberg cuts Siltronic to 'hold', seeing a challenging year

Berenberg cuts Siltronic WAFGn.DE to "hold" from "buy", seeing 2025 as a challenge for the German semiconductor materials supplier

The broker says that while Siltronic's Q4 results showed that it had managed a challenging 2024 well, the return to growth it had anticipated has not yet materialised and the company's outlook for 2025 "remains a challenge"

AI chip demand has been strong but soft shipments of smartphones and PCs and weak global manufacturing "has failed to clear abnormally high wafer inventories at Siltronic's customers," it notes

Market research shows that smartphone shipment growth will slow down vs 2024 and PC shipments will grow at a slow pace in 2025, the broker says

Meanwhile manufacturing PMI data in Europe, China and the U.S. "paint a similar, slow-moving picture for wafer demand in 2025"

"Absent a sharp re-acceleration in key wafer end-markets such as PCs, smartphones, automotive and the general industry, we fear strong AI growth may not deplete customer inventories fast enough to support a sustained sales recovery for Siltronic," Berenberg adds, with risk of further downgrades for to consensus earnings estimates