Soitec (SOI.PA) — 2026Q2 FY2026 Earnings Call Analysis

AI Growth Buried Under 2.3 Million Wafers

They stopped guiding gross margin because the only way to fix their balance sheet is to destroy their income statement.

Thesis: Soitec is a classic cyclical trap masked by an AI narrative. The AI/Photonics division is real (+34% growth), but it is too small to carry the dead weight of Mobile and Auto. The channel is stuffed with 2.3 million 8-inch wafers. Clearing this requires under-loading fabs, which hits gross margin by 300bps for every 10% drop. Management pulling GM guidance is the ultimate red flag. They are trading profitability for cash flow. SmartSiC failed against Chinese competition. Until the 8-inch glut clears in 2027, this is dead money.

Verdict: AVOID — Conviction: HIGH

Catalyst: Confirmation of channel inventory dropping below 2.0 million units, likely not until late FY26.

Key Risk: Hyperscaler capex pause would kill the only growing segment (Photonics/AI) before the legacy business recovers.

The Tell: Pierre Barnabé: 'The first thing is that we don't want any more to guide on the gross margin... we don't want our action on the inventory reduction to be hampered.' Translation: The margins are going to be ugly.

Friction Level: MODERATE_FRICTION — The duration of the inventory flush. Bulls see a V-shape in FY27. Bears see structural demand destruction settling at a lower baseline.