Silex Microsystems AB (360) | Hold (Not Rated) | MEMS, made to order

Research evidence excerpt

Silex Microsystems AB (360) | Hold (Not Rated) | MEMS, made to order

Silex Microsystems AB Hold | Target Price: SEK180.00

turnover and threatens production stability and quality, and we understand that the company

targets 50% to 70% utilisation, has not historically exceeded about 80%, and regards customer

lead times as the binding reason not to do so.

Management also pushed back on the idea that Silex carries CMOS-style utilisation leverage at all

as loading the fab harder requires hiring engineers and operators broadly in step with volumes,

so the incremental margin from utilisation is real but modest.

This has a direct modelling implication. We cap the utilisation rate at 80% across all scenarios and

taper the margin benefit above the 70% comfort zone, so peak loading and the peak margin are

never modelled together. The point is especially relevant for MEMS, where a high-mix line

processing customised three-dimensional structures and integrated packaging cannot be loaded

like a standardised logic or memory fab.

Table 9: Utilisation and margin implications

Utilisation outcome What it implies Margin impact

60-65% Current medium utilisation, meaningful Under-utilisation drag remains

spare capacity

70-80% Best part of the operating leverage curve Margin expansion without excessive strain

80-85% Strong growth, but operational risk rises Some strain penalty is warranted

>85% Theoretical upside, but higher delivery and Risk of downtime, maintenance pressure,

quality risk and employee turnover

Source: Kepler Cheuvreux

Operating leverage and depreciation

Silex carries a relatively high fixed-cost base, meaning incremental revenue tends to fall through

at an attractive contribution margin as utilisation rises, while under-absorption can weigh heavily

when loading disappoints.