French chip materials maker Soitec locks customers into multi-year deals as AI wafer demand surges
Demand for silicon photonics has surged as hyperscalers increasingly use optical connections to move data inside AI infrastructure, where copper links are becoming less attractive because of power and performance constraints.
French chip materials company Soitec is securing long-term supply agreements with its customers, locking them into multi-year contracts with deposits and fixed pricing. This move comes as demand for wafers used in AI data center optics surges, according to CEO Laurent Remont. Soitec has told investors that its photonics-SOI revenue will more than double this financial year, potentially reaching over $200 million, representing a significant floor for the company's growth.
The company supplies the substrate for almost all silicon photonics chips, holding an estimated 95% market share. Soitec's CEO revealed that around 80% of its capacity reservation agreements with photonics customers should be signed within a week or two, with the remaining agreements expected within a month. The cash deposits for these contracts have not yet been paid and will be received in stages as customers ramp up production.
Soitec requires customers to share inventory data to prevent over-ordering and keep wafers away from competitors. The CEO stated that Soitec does not anticipate needing a new plant until around 2029 and is pursuing expansion through shared underutilised facilities and additional tools in existing cleanrooms.
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