Recently, Jenoptik, a German company, released its preliminary performance for 2024, delivering a record high in both revenue and profit, but also revealing hidden concerns amidst industry cyclical fluctuations. Against the backdrop of weak demand in the semiconductor equipment market and increasing global economic uncertainty, this company with laser and optical technology as its core is attempting to stabilize its growth curve in the face of headwinds through diversified layout and capacity expansion.
Financial highlights
The technological barriers behind record breaking income
In 2024, Jenoptik's revenue increased by 5% year-on-year to 1.12 billion euros, with EBITDA reaching 222 million euros, maintaining the same year-on-year growth rate. This performance is mainly due to the continuous efforts of its advanced photonics department. Combined with previous financial reports and as the main part of the 2024 performance, this department may contribute more than 80% of the group's revenue, especially in the high-precision optical components of semiconductor manufacturing equipment and industrial lasers, maintaining technological leadership.
It is understood that ASML's EUV lithography machine relies on Zeiss' ultra-high precision optical system, and Jenoptik is a long-term partner of Zeiss, providing optical component processing and coating technology. In 2023, Jenoptik's annual report explicitly listed semiconductor front-end inspection optical systems as the core growth point of the photonics department, which are closely related to EUV lithography processes.
In addition, power battery welding is a key application scenario for industrial lasers, and Jenoptik's pulse laser technology is widely used for copper/aluminum welding. As early as 2023, Jenoptik announced a partnership with German laser welding equipment manufacturer Manz AG to develop battery production solutions.
Therefore, the above two areas may be the key engines driving Jenoptik's growth this period. Compared to its peers, Jenoptik's laser business growth rate is not as fast as industry giants such as Coherent, but its technological barriers in segmented markets ensure higher gross profit margins.
Hidden worries emerge
Decline in orders and semiconductor cycle pressure
Despite revenue growth, Jenoptik's annual order volume decreased by 6% year-on-year to 1.03 billion euros, and the backlog of orders also decreased by nearly 10% to 670 million euros, partly due to the sluggish global semiconductor equipment market. According to data from relevant institutions, global semiconductor equipment spending will decline by 5% year-on-year in 2024, mainly due to the contraction of capital expenditures by storage chip manufacturers. Jenoptik's semiconductor business is at the forefront, with customer order delays putting short-term pressure on it.
Jenoptik CEO Stefan Traeger stated at the earnings conference that the company is responding to short-term market fluctuations through capacity expansion and vertical integration of the supply chain. Jenoptik achieved its established capacity expansion target in 2024 and reduced its dependence on external suppliers. Specific technical details and financial data will be announced in the annual report on March 25th. However, Jenoptik's hidden concerns are not limited to cyclical fluctuations, but also face risks of external competition and technological substitution.
Diversified layout
Life sciences and intelligent mobility become new pivot points
To reduce semiconductor cycle dependence, Jenoptik is accelerating its penetration into the fields of life sciences and intelligent mobility.
In the life sciences sector, in 2024, Jenoptik's biophotonics equipment (such as flow cytometer laser modules) continued to grow in sales, and the mRNA vaccine production optical detection system in collaboration with BioNTech became a new growth point. Benefiting from the global investment in precision medicine, Jenoptik plans to invest 30 million euros in research and development in this field by 2025. In the intelligent mobile sector, previous reports have indicated that its in car LiDAR optical component business has grown by 18% with the commercialization of L3 autonomous driving, with customers including Luminar and Sagitar Juchuang.
According to relevant data agencies' predictions, the global medical photonics market will reach $120 billion by 2030, and the compound annual growth rate of the in vehicle LiDAR market will exceed 30%. Jenoptik's early positioning may open up a second growth curve for it.
Target for 2026
Dual bet on technology and market recovery
Despite Jenoptik's early prediction that it would not be able to achieve its revenue target of 1.2 billion euros by 2025, the company still maintains its mid-term 2026 target unchanged. This confidence is based on two factors: the expected recovery of the semiconductor industry and the conversion of technological reserves.
It is reported that TSMC and Samsung announced plans in early 2024 to significantly increase their advanced process capacity of 3nm and below by 2025. ASML CEO predicted at the January 2024 earnings conference that EUV equipment demand will rebound in the second half of 2025. As a core supplier of ASML optical components, Jenoptik is expected to benefit synchronously with the industry recovery.
In addition, VINCORION Defense Technologies, acquired by Jenoptik in 2021, received an order for laser ranging modules for the EU Space Surveillance and Tracking (EU SST) project in 2023 for its optoelectronic systems division. With the growth of European defense spending, Jenoptik's military business revenue increased by 22% year-on-year in 2023, becoming a new variable for performance growth.
epilogue
In the era of "light manufacturing", the core track of card positioning
Jenoptik's 2024 performance forecast confirms the strategic position of photonics as a high-end manufacturing infrastructure. In the short term, its performance is deeply tied to the semiconductor cycle; In the long run, the bottleneck in emerging fields such as biomedicine and autonomous driving may help them break free from the "cyclical" label. The annual report on March 25th will further reveal its R&D investment allocation and regional market strategy, as well as whether it can cross the threshold of 1.2 billion euros by 2025. The answer may lie in the game between global semiconductor production capacity shifting eastward and European industrial autonomy policies.
Source: Yangtze River Delta Laser Alliance
