Soitec's New CEO Bets Big on AI Photonics as RF-SOI Slump Drags Down Margins, While Former Chief's Exit Package Sparks Shareholder Revolt
Annual General Meeting, July 29, 2026 — Soitec SA reviews fiscal year 2025/26 results and unveils new CEO's strategic priorities
Soitec used its annual shareholder meeting to lay out a turnaround narrative built almost entirely around one product line: Photonics SOI, the substrate technology used in optical interconnects for AI data centers. New Chief Executive Laurent Remont, in his first appearance before shareholders since taking over on April 1, told the room that the segment "could more than double year-on-year" in fiscal 2026/27, building on a base of just over $100 million in the prior year. That guidance, delivered alongside confirmation that Soitec's Singapore plant has now been qualified for mass production of the material for its first customers, is the clearest signal yet that the company's near-term fate is tied to hyperscaler capital spending on optical connectivity rather than its legacy RF-SOI franchise.
Photonics SOI Becomes the Story
Remont framed the AI data center buildout as a two-level phenomenon: rising hyperscaler capex, which he said is expected to double within the year on the back of inference and agentic AI workloads, and a parallel shift from copper to optical connectivity as GPU clusters require faster, more energy-efficient interconnects. He argued Soitec's differentiation lies in the physics. Its Photonics SOI platform, he said, "delivers superior performance for optical interconnects... notably with optical losses in waveguides that are very difficult to match at scale." Photonics SOI revenue grew more than 30% in fiscal 2025/26 to cross the $100 million mark, and management confirmed roughly EUR 100 million of capital expenditure this year will be directed largely at Photonics SOI and POI capacity, leveraging what Chief Financial Officer Albin Jacquemont called the "fungibility" of past investments to limit incremental cash outflow.
Management was notably cagier when pressed by a shareholder for hard figures on total addressable market or content-per-GPU metrics. Remont declined to share internal TAM estimates, saying only that the shift to optical is directionally certain even if the pace of scale-out adoption within data center racks remains unresolved: "The trend to reduce the cost per token, there is a real strong motivation on product players to move over to copper — from copper connectivity to optical connectivity. There's no doubt. The question is only how fast is this going to happen."
Fiscal 2025/26 Was a Deliberate Reset, Not Just a Downturn
The headline numbers were ugly by design. Revenue fell 30% year-on-year to EUR 592 million, gross margin collapsed to 16.3% from 32.1%, and the company swung to a current operating loss of EUR 8 million from a EUR 136 million profit the year before. Management was explicit that this was a strategic choice: factory utilization was deliberately cut to roughly 50% from about 70% to force down excess RF-SOI inventory sitting with customers, a decision that Jacquemont said cost approximately 800 basis points of gross margin on its own, with unfavorable product mix (300 basis points) and declining subsidies (180 basis points) adding to the drag.
The payoff was a return to positive free cash flow of EUR 63 million, reversing a EUR 23 million cash burn the prior year and beating consensus of EUR 8 million by a wide margin. Jacquemont was pointed about the source of that outperformance: "This generation of free cash flow exceeds the consensus... The performance clearly demonstrates the quality of our execution rather than any support from market conditions." Net debt fell to EUR 56 million, a comfortable 0.4 times EBITDA, giving the balance sheet room to maneuver even as the income statement remained deeply negative — net loss for the year was EUR 220 million, driven largely by a EUR 41 million impairment on Smart SiC assets tied to what management described as rapid expansion of low-cost Chinese silicon carbide capacity pressuring pricing.
Q1 Already Signals the Inflection
Soitec pre-released first-quarter fiscal 2026/27 revenue of EUR 113 million last week, up 23% year-on-year and roughly 15% above the company's own prior target, a beat management attributed almost entirely to photonics momentum. The early release itself was notable: Remont said the company moved up the disclosure "in the interest of rigor and transparency towards the market" given improving visibility into photonics demand and delivery capacity.
End Markets Outside AI Remain Weak
The recovery is narrow. Mobile communications revenue, still Soitec's largest segment historically, fell 41% year-on-year as RF-SOI inventory continues working through the distribution chain — Jacquemont noted current shipment run-rates equate to roughly 50% of end demand, implying inventory normalizes on a six-month cycle, though he declined to put a firm date on resolution. Automotive and industrial revenue dropped 44%, reflecting both a weak global auto cycle and soft demand for power SOI and FD-SOI. Edge and Cloud AI, the bucket that includes photonics, was the lone bright spot, up 8% overall and 19% excluding merchant SOI.
Capital Discipline Replaces Growth-at-All-Costs
Capital expenditure fell 40% year-on-year to EUR 135 million in fiscal 2025/26, down sharply from roughly EUR 250 million a few years prior, and will be held to approximately EUR 100 million in fiscal 2026/27. Management described fiscal 2026/27 as a "transition year" in which factory utilization improves but stays well below optimal levels, while government subsidy support is expected to decline meaningfully as the EPCEI2 program in France concludes ahead of a possible successor framework. A stronger euro against the dollar — the company is 95% hedged at $1.19 — adds another margin headwind for the year ahead.
Tax Settlement Erases EUR 320 Million in Carried-Forward Losses
A shareholder pressed management on a tax settlement with French authorities disclosed just before the meeting, covering a dispute originating from a 2021/2022 audit tied to prior corporate restructuring and the valuation of assets transferred to Soitec's Singapore entity. Jacquemont clarified the mechanics: Soitec paid EUR 60 million in cash and, separately, deactivated EUR 320 million of carried-forward tax losses that will no longer be available to offset future profits. He was careful to frame the outcome as a risk mitigation rather than a win: "We're not rejoicing... The final decision is protecting us from a significant risk that was bearing down on our company," noting the amounts initially at stake from tax authorities were considerably higher than what was ultimately settled.
Governance Friction Over Former CEO's Exit Package
The meeting's sharpest moments came from an employee shareholder representative who urged investors to vote against the resolution approving former CEO Pierre Barnabé's fiscal 2025/26 compensation. Barnabé, who stepped down effective March 31, 2026, received fixed remuneration of EUR 525,673, short-term variable pay of EUR 443,080 (an 83.6% target achievement rate driven almost entirely by free cash flow outperformance), and a noncompetition indemnity described in the transcript as roughly EUR 162,837, equal to 50% of his gross fixed remuneration, activated by the board in November 2025. Chairman Frédéric Lissalde defended the clause as standard protection of "technological and strategic assets," noting it barred Barnabé from working with or advising direct competitors.
The employee representative also cited an internal satisfaction survey showing results at their weakest in years, alongside salary negotiations settled below inflation and a headcount reduction program still underway, arguing the executive payout came at an awkward moment for a workforce absorbing cost cuts. Despite the objection, all resolutions were approved by the meeting, with the company reporting each cleared more than 98% of votes cast.
New CEO Compensation Structure Shifts Toward Long-Term Incentives
Remont's pay package, approved as part of the meeting's resolutions, totals EUR 1.75 million in target remuneration, below Barnabé's EUR 2.285 million, with a materially different structure: roughly one-third fixed, one-third short-term variable, and 42% long-term variable, versus a heavier weighting toward fixed and short-term components previously. Long-term incentives are tied 75% to financial metrics — adjusted earnings per share and total shareholder return versus a European sector index — and 25% to ESG targets covering water recycling and diversity. Short-term variable pay for the CEO will be split 60% financial (revenue from photonics, current EBIT, free cash flow) and 40% non-financial, including commercial strategy and carbon footprint reduction.
Management's Read on the Chinese Open-Source AI Threat
An individual shareholder raised the disruptive potential of low-cost Chinese open-source large language models, referencing the recent Kimi K2 release, and asked whether cheaper inference could undercut demand for the infrastructure Soitec's technology serves. Remont's response reframed the competitive dynamic as favorable to Soitec regardless of which model wins: with the industry singularly focused on reducing cost per token to support scaling, he argued optimized interconnects are one of three main levers alongside model efficiency and dedicated processors, and that Soitec's technology addresses the connectivity lever "whether it be with American players or European players or Asian players."