「Stock God」 Serenity: Bullish on XFAB, Believes Its Valuation Is Below Reset Cost, With SiC, GaN, and Silicon Photonics Multi-Growth Thesis

BlockBeats News, June 1st, "Stock God" Serenity shared a post discussing the investment thesis of Belgium-based semiconductor foundry XFAB. He believes that with the growth in demand for 800V power architecture, AI data centers, and power semiconductors, the SiC (Silicon Carbide) and GaN (Gallium Nitride) industry chain is expected to continue benefiting. As the only high-capacity SiC pure-play foundry in the United States, XFAB occupies a key position in the Western semiconductor supply chain restructuring process.

Serenity pointed out that XFAB has achieved mass production of advanced 6-inch SiC processes and is currently expanding its 8-inch GaN capacity. There is potential for future layout of 8-inch SiC with support from the U.S. "Chip Act." The company's SiC business revenue has grown by 152% year-on-year, but due to the downturn in the automotive industry, its growth potential has not been fully reflected in the market. Additionally, power semiconductor companies such as Navitas (NVTS) and Power Integrations (POWI) have partnerships with XFAB, making it a key beneficiary in the AI power and 800V architecture industry chain.

He further mentioned that the U.S. Department of Commerce has designated XFAB as the only high-capacity SiC foundry in the U.S. and has received approximately $50 million in government support. On the European side, through the "European Chip Act," XFAB has received around 128 million euros in funding to support MEMS and AI-related capacity construction, as well as an allocation of 47.6 million euros to support silicon photonics supply chain development. Serenity believes that these subsidies and certifications from governments in Europe and the U.S. reflect XFAB's strategic position in the key supply chain.

In terms of valuation, Serenity stated that XFAB's current P/B ratio is only about 1.28 times, and based on his calculation of the foundry reset cost, the company's actual transaction price might even be lower than the reset value. He believes that investors are currently acquiring the existing business at a discounted valuation and are also receiving for free the growth option of future SiC, GaN, and silicon photonics businesses.

Overall, Serenity believes that XFAB has limited downside risk, and with catalysts such as the restructuring of the European and U.S. supply chains, ongoing chip subsidies, and the commercialization of silicon photonics, the company has a valuation reappraisal potential of approximately 2.5 to 4 times.