Key Takeaways
- The semiconductor industry’s shift towards 2nm nodes is increasing demand for etch and deposition tools.
- VAT Group AG holds a 70% market share in vacuum valves, positioning it well for future growth amid structural industry changes.
- Despite a recent decline in order backlog, VAT’s financials reveal strong profitability and resilience against macroeconomic challenges.
Technological Transformation in Semiconductor Manufacturing
The semiconductor industry is poised for significant change by 2025, largely driven by advancements in chip manufacturing techniques such as 2nm nodes and gate-all-around (GAA) architectures. This evolution is reshaping capital expenditure priorities in wafer fabrication equipment (WFE), with increasing investment directed towards etch and deposition tools.
VAT Group AG, the leading provider of high-end vacuum valves essential for semiconductor production, is strategically positioned to benefit from this transition. With a growing market share of 70% in semiconductor-related vacuum valves as of Q4 2024, VAT is capitalizing on the industry’s shift from traditional lithography towards more complex etching and deposition processes. The company’s Valves segment represents 84% of order intake in semiconductor applications, driven by manufacturers’ needs for greater precision in chip production.
Recent trends indicate that demand for deposition tools increased by 12% in 2024, while etch tools saw a 5% growth. These developments reflect structural changes rather than cyclical trends, emphasizing the necessity for vacuum solutions in the production of next-generation chips.
Financial Resilience Amid Challenges
VAT’s financial performance underscores its capability to turn its industry positioning into robust profits. The company reported an EBITDA margin of 29.6% in Q2 2025, a notable increase from the previous year’s 22.0%. After adjusting for foreign exchange rates, the margin reached 31.2%, showcasing VAT’s resilience in the face of currency fluctuations.
Key factors contributing to this margin growth include operational efficiency through automation, a shift towards higher-margin semiconductor-related orders, and pricing power supported by its dominant market share. Additionally, the Global Service segment, offering spare parts and repairs, further solidifies margins with a 43.2% EBITDA margin driven by high fab utilization rates and consistent revenue from consumables.
Looking Ahead: Growth Potential
While VAT’s order backlog of CHF 293.8 million reflects a 13.4% sequential decline, this is attributed not to weak demand but to aggressive execution of previous orders. The Global Service segment experienced a 23% increase in orders, further indicating strong underlying demand.
As VAT prepares for a potential industry upcycle, its significant market position in etch and deposition valves positions it to capitalize on the projected 5% growth in the WFE market in 2025. With increased investment from Chinese OEMs and global manufacturers accelerating 2nm node production, VAT’s capacity expansions and R&D investments are timely.
Investment Considerations
For investors interested in the semiconductor equipment sector, VAT Group presents a strong case. Its leadership in etch and deposition valves positions it for robust performance, even amidst macroeconomic uncertainties affecting capital expenditures. The long-term shift towards vacuum processes offers promising growth prospects for VAT Group, making it an appealing investment for those looking for stability and growth in a dynamic industry.
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