X Fab Silicon Foundries EV
PAR:XFAB

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PAR:XFAB
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Earnings Call Transcript

Earnings Call Transcript
2021-Q2

from 0
Operator

Good day, and thank you for standing by, and welcome to the X-FAB Quarterly Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. And I would like to hand the conference now to your first speaker today, Mr. Rudi De Winter. Please go ahead, sir.

R
Rudi De Winter
MD. CEO & Director

Thank you very much. Welcome, everyone. We also have Alba Morganti, CFO, in the call today. So I'm very glad to be able to share the excellent results of the second quarter this year. Revenues were $161 million, exceeding the guidance, and they were up 36% year-on-year and 4% quarter-on-quarter. The bookings remained strong at $209 million, 110% compared to previous year and about flat compared to previous quarter.EBITDA margin came in at 26.9%, also above guidance. And EBITDA was $43.3 million, 173% up year-on-year and 22% quarter-on-quarter. EBITDA was -- EBIT, sorry, was $24.6 million, up $27 million compared to previous year and up $7.6 million compared to previous quarter. We now expect that the business will remain strong going forward and can give following guidance for the Q3 2021. We expect revenue to be between $162 million and $170 million with an EBITDA margin in the range of 18% to 22%. For the full year revenue guidance, we increased to $640 million to $660 million. So on the midpoint, it's about an increase of $30 million with an EBITDA margin in the range of 11.5% to 23.5%. Previously, it was 18% to 21%. So it means at the midpoint, an improvement of 300 basis points. The business continued to grow strongly throughout the second quarter and across all segments. The revenue is determined by our ability to ramp up the factories and constrains the demand. X-FAB core business targeting the automotive, industrial, medical market recorded revenues of $128 million, up 38% year-on-year and 3% quarter-on-quarter. The CCC revenues came in at $32.4 million, corresponding to a growth of 25% year-on-year and 6% quarter-on-quarter. Bookings remained strong throughout the second quarter and roughly at the same level as previous quarter, but it means that it further increases our backlog.In the second quarter, demand continued to be driven by ongoing volume recovery, following the COVID-19-related weakness of last year, but also by adding new customers and projects and by transferring existing development projects into volume production. Interest in X-FAB specialty technologies is strong as they enable smart solutions, which are key to address today's societal challenges. These include climate change and the need for greener energy and transportation. So this drives our silicon carbide business. In the area of COVID-19, aging societies with a need for fast and reliable point-of-care diagnostics drives our lab-on-chip revenues. And the globally increasing connected world also requires more chips for -- like sensors and 5G RF applications.With a consistently strong order intake and the factories running at high utilization levels, the allocation of customers remains a necessity in the second quarter. X-FAB first priority remains to ensure its customers -- that customers receive the minimum supply they need to avoid disruptions in the supply chain. An improvement -- an important part of this effort is to move business to X-FAB France, where we still have capacity available. In the second quarter, the share of France -- of the France site in the revenues and the X-FAB technologies part in the X-FAB France revenues, as opposed to the legacy business, was 20%. However, it is expected to increase significantly in the second half of 2021.The order backlog accumulated at the end of the second quarter, and it remains at a high level and will contribute positively to the business growth in the coming quarters. This quarterly prototyping revenues were $20.4 million, up 31% year-on-year and 8% quarter-on-quarter, reflecting the continued strong interest in X-FAB technology portfolio. On the operations side, I can comment that in the second quarter, X-FAB factories continue to run at high utilization rate. And the focus was on execution excellence and productivity improvements and remains essential to ensure best possible supply to X-FAB's customers. In the light of the strong demand, X-FAB is making every effort to ensure operations run smoothly at all locations and gradually further increase output. This includes the hire of additional staff, activities to secure the raw materials as well as strict compliance with safety measures, which are in place to prevent any COVID-19-related disruptions. This is particularly important in our factory in Malaysia, as there, the COVID incidents are still high, and there is a very strict quarantine policies. So we take proactive measures to minimize possible impacts on our operations. The silicon carbide activities progressed well, and X-FAB was able to further expand its silicon carbide customer base and project pipeline, mainly driven by existing customers, while expanding their portfolio. Silicon carbide bookings more than doubled, and the silicon carbide revenues in the second quarter came in at $7.2 million, up 44% year-on-year and 15% quarter-on-quarter. The demand for the in-house silicon carbide epitaxy is progressing well. About half of our customers are now qualified on silicon carbide epitaxy, and the line is well utilized now. Silicon carbide epitaxy refers to the added value layer that we put on top of the substrates and is a significant value add to these products.Capital expenditure in the second quarter amounted to $14.2 million, up 90% compared to the same quarter last year. The growth in CapEx was mainly related to prepayments for new equipment, which was part of the investment projects initiated in the first quarter. In the second quarter, X-FAB launched additional CapEx projects for expansion of capacity that have a total value of about $85 million, most of which will be due for deliveries and payments in 2022.And with this, I would like to pass the word to Alba.

A
Alba Morganti
Chief Financial Officer

Thanks, Rudi. Good evening, ladies and gentlemen. And now let's walk over the financial update. We are very pleased to share our good performance of the second quarter. As you could have seen, our EBITDA was $43.3 million with an EBITDA margin of almost 27%, which was clearly exceeding the guidance of 17% to 21%. The positive earnings development is mainly due to the strong revenue growth, as Rudi mentioned. But on top, the inventory of unfinished and finished goods significantly increased by $5.3 million, which also contributed positively to the second quarter profitability.An extraordinary element to report is that in 2020 and in the context of a COVID-19 government support scheme, X-FAB Texas received a loan of $6.5 million. This was done to secure the payment of the payroll and utility bills. Under the terms of that program, X-FAB Texas was able to apply for a loan forgiveness after having fulfilled certain conditions regarding the retention of employees. This loan forgiveness has been approved by the authorities in June this year. Thus, the balance of the loan was released to income and offset against cost of sales, which obviously had also a positive impact on our profitability of the second quarter. But even if we exclude this one-off effect, EBITDA would still have been above the guidance as it would have reached almost 23%. Based on the positive business development and clearly expected a further increase in profitability, the deferred tax assets from losses carried forward increased by almost $3 million in the second quarter.Cash and cash equivalents at the end of the second quarter were of $205.1 million, which translates into an increase of 5% compared to the end of last quarter. In the second quarter, the share of euro-denominated sales amounted to 33%, therefore, highly limiting the impact of exchange rate fluctuations on profitability and ensuring a natural hedging of our business. We will continue our efforts to further increase the share of euro-denominated sales, up to a level of approximately 40%, which corresponds to the share of our cost incurred in Europe. The actual U.S. dollar-euro exchange rate for the second quarter of 2021 was 1.20 leading to an EBITDA margin of almost 27%. At a constant exchange rate of 1.10, as experienced in the second quarter last year, the EBITDA margin would have been 27.8%.And now I would like to give the word back to Rudi.

R
Rudi De Winter
MD. CEO & Director

Thank you, Alba. It's a great pleasure to see the high level of interest in our technology offerings and all end markets we serve on long-term growth markets, they are performing very well, and this is not only related to the ongoing recovery after the past 2 difficult years. Our long-term strategy to serve this long-term growth markets is working well.Let me go a bit in detail. First, there is the electrification of cars will be one of the growth pillars with our smart high-voltage system on chip solutions as well as our silicon carbide. Further, we cross-sell these technologies into the industrial market who likes us because of the excellent support and the good design appeal. Second, there is the aging society, combined with the awareness of more on-the-spot diagnostics that will continue to drive the demand for our medical technologies. And third, the result of connectivity, such as the 5G and abundance of sensors, is another pillar of growth supported by our RF SOI technologies.Societies are in transformation, mainly driven by climate change and COVID-19 pandemic. And while this outcome is -- and the outcome of the pandemic is still open, it is clear that the smart technological solutions are essentials to tackle all these challenges ahead of us. We at X-FAB take pride in offering technologies, which enable such smart solutions, and I see X-FAB well positioned for further growth. In the short term and in the light of the challenges related to the extraordinary demand situations, all our customers can be rest assured that the reliable supply is our first priority. Our teams across all X-FAB sites are working very hard to deliver excellent results and to further increase the output to close the gap on the demand.Thank you. And operator, we are now open for questions.

Operator

[Operator Instructions] Our first question comes...[Audio Gap]

U
Unknown Analyst

The first one relates to the loan and the one-off impacts on the P&L. Would it be possible to be a bit more specific on the impact on sales, cost of sales and the EBITDA, overall, and that would be helpful?

A
Alba Morganti
Chief Financial Officer

Yes, sure. So the amount of the loan was $6.5 million, which we booked when we received it in Texas. And we kept it as a loan until we received the full confirmation from the local authorities that this loan was effectively forgiven, so canceled. It was -- in other words, we were compliant to all the regulations that could lead to a grant, I mean to transform this loan into grants. Therefore, we decided to decrease the cost of sales by the same amount. And therefore, yes, we had to book it in Q2 because we received the confirmation from local authorities only in Q2, on 10th of June, if I remember well.

U
Unknown Analyst

Okay. Okay. That's fair.

A
Alba Morganti
Chief Financial Officer

That's why we had a big impact on Q2, and we wanted to highlight it because, of course, it was a one-off effect, and of course, had a big impact on our EBITDA.

U
Unknown Analyst

Yes. Okay. And the second question, just in the press release, you talked about accumulated backlog that will contribute positively to business growth in the coming quarters. Obviously, curious if you could just shed some light on your visibility beyond 2021. Yes, customers are submitting orders further than usual. So yes, what is sort of the visibility of the order book given the development? You're now disclosing $209 million, but how much of that orders that will be delivered next year, for instance?

R
Rudi De Winter
MD. CEO & Director

Yes. So the -- obviously, because we're -- order bookings are about $50 million higher than what we delivered. So the backlog is increasing with this amount, and as such, our visibility. So customers are booking on a longer horizon. But clearly, the real demand and forecast that customers give us are also very bullish and now we know that in the cycles of shortage, forecasts to be overoptimistic. So I prefer not to share what our customers' total forecast are because while we -- I believe they are too optimistic and -- but we will need to see which is typically the case in such bullish times.

U
Unknown Analyst

Okay. Okay. And then just a final question. I read that you have already made prepayments for new equipments in line with projects for the capacity expansion. You mentioned a total value of $85 million. You indicated earlier that excluding additional machines, you could deliver $750 million. You're already reaching $640 million to $660 million this year. So basically, my question is, what are your thoughts at this stage on the production capacity road map? Or what are sort of the challenges if you want to accommodate demand that you're seeing today?

R
Rudi De Winter
MD. CEO & Director

So the equipments that we order, so it takes about 18 months to get those equipments online. So it is the -- well, it's a various type of equipment. Some have short, some have longer lead times. But on average, you could say it's almost 9 months to 1 year lead time to have them really in the factory and then another 6 months to fully start connecting, hooking them up and qualifying all the processes until they can be really contributing production. So these investments, they will become really effective in 2023 almost.The -- yes, so we have capacity in place to get roughly to those amounts. You can say, yes, why isn't that revenue higher? Well, actually, it's -- there is a theoretical capacity based on the equipment that are in place and then there is the practical. You need to have everything lined up well to get the full capacity out of the machines, meaning, we need to have the operators, the technicians and everyone well aligned, having the machines also fully operational all the time. So when there is downtime on equipment, so you lose capacity. And so it is a matter of really now fine-tuning the -- and constantly improving the productivity of the factory to come to the full utilization of the equipment. So this is something that is now ongoing, yes, quarter-after-quarter. We expect that we will get more out of the factories. Then there is also simply the lead time. So Alba mentioned that our WIP went up. So we have just more material in the fab. So it has to be -- takes about 3 months to get it out of the fab. So that's also a portion of the ramping up, consisting getting more material in and it takes a bit of time before it comes out. So therefore, we foresee a roughly a $10 million increase in revenue from Q2 to Q3. You should compare guidance with -- previous guidance with this quarter's guidance.

Operator

We will now take our next question. Please state your first and last name before you ask your question.

R
Robert Duncan Cobban Sanders
Director

It's Rob Sanders, Deutsche Bank. So my first question would just be on 8-inch equipment and wafers. Techtronic is saying they're fully loaded now on 8-inch from a wafer side. And I'm assuming that there has been a lot of issues around finding refurbished 8-inch equipment because a lot of the equipment guys have stopped producing a lot of the 8-inch equipment. Is that something that could be to prevent you from increasing your capacity? Or do you think it's more about debottlenecking and other aspects?

R
Rudi De Winter
MD. CEO & Director

Well, this is different from factory to factory. So in our factory in France, where we still have capacity, but where it's a matter of converting from legacy technology to X-FAB's own technology, there is a matter of debottlenecking and there are certain equipments that we need to gradually fill in more and more to make the factory fully capable of running X-FAB core technologies. In the factory in Kuching, which we have been debottlenecking for the past several years, is quite well optimized and there to increase capacity, we need to invest across the board in all sets of equipment to further increase the capacities. Your question, yes, how much -- so this indeed harder to get refurbished equipment. So more and more, we're talking about new equipment.

R
Robert Duncan Cobban Sanders
Director

But then you can access your equipment that you need. I know that [indiscernible] has stopped producing 8-inch equipment for a while that we think that most of the vendors now are producing enough 8-inch new equipment to support you.

R
Rudi De Winter
MD. CEO & Director

Yes. So we get support on new equipment. Now sometimes it is also possible it's a 300-millimeter equipment that is converted to 200-millimeter. That's also possible. But there is still 200-millimeter. It depends from vendor to vendor, but we find solutions.

R
Robert Duncan Cobban Sanders
Director

And on the Capital Markets Day, I can't find the slides on the web, but I just wanted to revisit what you actually said in terms of financial goals, just so I could catch up. I've had some trouble actually accessing the webcast. If you could just remind us what financial goal are and the time line around them? Then I have just one last question then.

A
Alba Morganti
Chief Financial Officer

The financial goals that we have is clearly not to burn our cash, so to stay at the level we are currently. And then we also gave a guidance in terms of next EBITDA margin, and yes, we gave the guidance for Q3. Is that what you mean?

R
Rudi De Winter
MD. CEO & Director

You refer to the previous guidance or...

R
Robert Duncan Cobban Sanders
Director

No. I was just referring the $1 billion goal.

R
Rudi De Winter
MD. CEO & Director

Yes. So that was, yes, in 2025, 2026 horizon with an EBITDA of 27%.

R
Robert Duncan Cobban Sanders
Director

Okay. And just last question would just be, some of the Tier 1s are now saying -- they are admitting that they're basically holding semiconductors, like [indiscernible] on their call basically admitted that they are significantly increasing inventory to win business.So what's your best guess around when that will kind of normalize, that buffer inventory building? I mean because you only have to look at the automotive production that's only going to grow 8%, 10%, but your people, like Melexis, are guiding 25% for the year. So there's obviously a kind of disconnect. But what's your best guess about when that will kind of normalize that quoting effect?

R
Rudi De Winter
MD. CEO & Director

Well, I -- yes, so you are right. This is what we hear as well. Now I have quite a lot of escalation calls where it's threatening line stops. So I have the impression that it is still very, very tight. And we have all our customers on allocation. So the -- so I think that there is still -- I don't know what the -- for sure, what the real -- I have the impression that what we're delivering now is kind of not too far exceeding the real demand. So -- but we are also not fulfilling the demand, the full orders. So I expect that, yes, there will be lesson also in the automotive industry that will be building up some stock. But yes, the capacities are limited, so it will take a bit of time to build up that stock, and I have not a good idea how long that's going to take.

Operator

[Operator Instructions]

D
David O'Connor
Analyst of IT Hardware and Semiconductors

It's David O'Connor from Exane BNP Paribas. Rudi, a question on my side regarding -- you look at the raised outlook for this year at $650 million top line. You talk about a theoretical capacity of $750 million. I'm just wondering, as you look into next year -- can you talk about how much of that incremental $100 million will become online in -- over the next couple of quarters with a view to 2022? I mean, is that $100 million theoretically available in 2022? Or when will it take a lot longer to realize that? And I have a follow-up.

R
Rudi De Winter
MD. CEO & Director

Well, it depends. So it depends on the product mix. So if the product mix is right and the factories execute well and there is no incidents or whatever, then yes, that would theoretically be possible.

D
David O'Connor
Analyst of IT Hardware and Semiconductors

Understood. And does that come on quarter-over-quarter gradually as you go through 2022? Or will that already be available as we exit this year?

R
Rudi De Winter
MD. CEO & Director

No. So that will be asset. So the product mix needs to be right, and that -- it's not ideal yet and then there is the -- there is gradual improvements as such. You do not have just overnight the right staff and everything running well. So therefore, this will be a gradual step-by-step growth.

D
David O'Connor
Analyst of IT Hardware and Semiconductors

Okay. Got it. Understood. And then as a follow-up, when you talked about the X-FAB funds up to 20% in Q2 of X-FAB technologies in place there, and that's a significant increase as the year -- through the rest of the year. Can you explain us more a bit around why your implied Q4 revenue guidance kind of flattish quarter-on-quarter, yet you expect a significant increase in your technology in France and you talk about having excess capacity there? Why isn't the revenue kind of higher implied in Q4? Or is it that you're adding capacity or demand there, and on the flip side, you're seeing it up in Kuching? If you could explain around that, it would be helpful.

R
Rudi De Winter
MD. CEO & Director

Yes. So in Q4, it's still a bit out. So if we just look on the pure -- so it could be higher. Yes, that's maybe still too early to -- depends on the execution and how things are running well. But that's what we see -- what we are comfortable for now.

D
David O'Connor
Analyst of IT Hardware and Semiconductors

Okay. Okay. And if I could just one last follow-on to that. So this excess capacity you have in France, can you quantify that for us? I mean, how much in terms of like ready capacity have you got available there that can start to contribute to the significant increase in the second half?

R
Rudi De Winter
MD. CEO & Director

Yes. So this is something in the range of $80 million or so on a yearly basis. However, that requires still to have -- so that requires -- that is available with the right product mix. Now going forward, we expect -- well, the most likelihood to see the strongest demand for our X-FAB core technologies and we also give preference, but that requires some further debottlenecking and all those equipments that we already started ordering in early Q1 and end of last year. They are gradually getting online into end of this year, Q1, Q2 and so forth next year. So that also explains why we will see a gradual ramp in France with these X-FAB technologies. So on the wafer out, so it was like 20% in France on X-FAB technologies. However, in the wafer starts, I think we're rather at 40%. So that's why we are so sure that in Q3, it will be significantly different.

Operator

[Operator Instructions]

B
Bernd Laux

This is Bernd Laux speaking from Blackwall Capital. I'd like to get back to what we just discussed on the X-FAB France situation and the fact that you're increasing significantly the share of X-FAB core technologies. Can you provide us with an idea about the difference in terms of either vehicle price or margin potential from revenues that you generate with X-FAB technology compared to legacy technology? And the second question is with respect to your CapEx expansion project, the $85 million that you mentioned. Can you share with us how much additional revenue capacity will result from such a project when it's finished and fully available?

R
Rudi De Winter
MD. CEO & Director

So the -- on the X-FAB core technologies in France, so they are more complicated and significantly different from the technologies that we refer to as a legacy technology. And yes, so the more complex ones they bring around twice the revenue per wafer than the legacy technologies.On the equipments, the investments that we do, so the $85 million mainly consists on the one hand across-the-board investment in Malaysia, where we -- actually, the investment is not so -- such a strong business case because we need to invest across the board. So it's around $3 investment for $1 revenue on a yearly basis. And for the investments in France, so the majority is about -- that's about another half of this $85 million is related to adopting and debottlenecking the factory in France to be able to run fixed up core technologies. And there, the roughly $40 million or $45 million brings an additional revenue of something in the range of $50 million or so in France.

Operator

[Operator Instructions]

M
Michael Vander Elst
Senior Portfolio Manager

This is Michael Vander Elst from Petercam. I have a couple of follow-up questions on the X-FAB France conversion. Did I understand correctly that the ASP of a wafer is twice that on your own technology versus the legacy?

R
Rudi De Winter
MD. CEO & Director

Yes.

M
Michael Vander Elst
Senior Portfolio Manager

Okay. That's very promising. Is it fair to assume that the cost price is also much higher, but overall, the gross margin is superior on your core technology?

R
Rudi De Winter
MD. CEO & Director

Yes. So there also we invest in a bit of debottlenecking, so there is also more depreciations into it. And it's also somewhat more -- well, there's some more layers, so there is more effort to it. However, yes, as you know, in a factory, we mainly have fixed costs for the employees and so forth, so that finally -- well, bottom line, further if we can fill the factory with our core technologies, we're better off.

M
Michael Vander Elst
Senior Portfolio Manager

Okay. So does that mean, that from Q3, we will have to be modeling for a decline in CCC sales being replaced by more automotive, industrial and medical?

R
Rudi De Winter
MD. CEO & Director

I think we need to see. So I think maybe the -- initially there, it comes a bit on top. And in the longer term, there will be indeed some replacements.

M
Michael Vander Elst
Senior Portfolio Manager

Okay. So that's going to be sort of a gradual process over the next 8 to 12 quarters before this is fully finalized?

R
Rudi De Winter
MD. CEO & Director

Yes, I think that will before -- I think we will still produce legacy technologies into 2023 in France. So it will be a gradual evolution.

M
Michael Vander Elst
Senior Portfolio Manager

Okay. Then I also have a follow-up on your targets, as you mentioned at the Capital Markets Day, because there is a target for the EBITDA margin. But if I'm not mistaken, you did not give a target for the gross margin, correct?

A
Alba Morganti
Chief Financial Officer

No.

R
Rudi De Winter
MD. CEO & Director

No. I did last year on...

M
Michael Vander Elst
Senior Portfolio Manager

I'm actually curious, supposed that France will be fully converted into your core technology, then certainly, your gross margin should expand well beyond the current level of around 20s.

R
Rudi De Winter
MD. CEO & Director

Yes, yes, that's right. Yes.

M
Michael Vander Elst
Senior Portfolio Manager

But do you have something in mind?

R
Rudi De Winter
MD. CEO & Director

Yes, that's probably -- I don't want to say anything wrong here, but probably the gross margins, they typically are close to our EBITDA margins by coincidence. So there probably will be also somewhere in the 27%.

M
Michael Vander Elst
Senior Portfolio Manager

Okay. Good. Well, now then I have a final question, which is a nasty question. Every quarter, I adjust the gross profit for that inventory impact because it's always a plus or a minus, and it's always a bit distorting. And this quarter, I did again, but I also took out the loan. And if I compare Q2 with Q1, when you have slightly higher sales with slightly higher gross profits underlying. Was there a large swing in the sales mix-or-so or something else that I maybe missed?

R
Rudi De Winter
MD. CEO & Director

I would think that the gross profit is not too different if you take out the loan.

M
Michael Vander Elst
Senior Portfolio Manager

I take out the loan and the inventory impact in both quarters.

A
Alba Morganti
Chief Financial Officer

Well, it's the increase of sales, which is driving mainly the -- don't forget that our cost base is 70% fixed. So the more we sell -- and especially if we are coming well month-after-month, we can achieve a good economy of scale, which we usually can't get if we are -- we go up and down in our sales.

M
Michael Vander Elst
Senior Portfolio Manager

I'll quantify the numbers maybe here. On sales of $155 million in Q1, you had a gross profit of USD 33 million, if I strip out the inventory effect. In the second quarter, you had sales of $161 million. And if I strip out the $5 million inventory and the $6 million of loan, maybe you get to $30 million on slightly higher sales, slightly lower gross profit, excluding the inventory and the loan.

R
Rudi De Winter
MD. CEO & Director

Yes.

M
Michael Vander Elst
Senior Portfolio Manager

What happened to the sales? Was it the sales mix effect or something?

R
Rudi De Winter
MD. CEO & Director

No. This is because we are actually increasing staff. We do have increasing costs. So we started to add staff end of the last year, training people and support, but it will also take about 3 months until they are kind of fully trained and effective. And so we expected that. So with a bit of these effects, you will also still see in Q3. But then in Q4, I think that will -- we do not intend to have a further increase, and we should see that and also in a continued productivity improvement.

M
Michael Vander Elst
Senior Portfolio Manager

But this is basically sort of a startup cost in anticipation of growth?

R
Rudi De Winter
MD. CEO & Director

Yes. .

M
Michael Vander Elst
Senior Portfolio Manager

Good. So then I'll turn the nasty question into a positive thing. Thanks. That's it.

Operator

[Operator Instructions]

U
Unknown Analyst

This is [indiscernible]. On the CapEx and the budget, the annual budget would be $85 million. Is that something on top? Or what can we take as a kind of average budget, CapEx budget for the next few years?

A
Alba Morganti
Chief Financial Officer

So our normal CapEx budget is around 15% of the sales, which is divided in equally: 7% to 8% for expansion CapEx and 7% to 8% for capacity operational CapEx. So it means that is in an average. Now don't forget that the last -- past 2 years, we slowed down significantly in CapEx due to the down cycle. And we are now ramping up a bit, which is rather normal and also to make sure that we can catch up with the increase of demand, and yes, invest in assets that will bring us to that level of production to satisfy demand.

R
Rudi De Winter
MD. CEO & Director

So the $100 million now is roughly this 15%, and then it depends how strong demand is going forward and how fast we want to ramp. We might go above or below this number in the next year. But if things remain as it is, it's not unlikely that we might invest more next year.

U
Unknown Analyst

Because if you take 15% on $750 million, then it gets to $112.5 million, et cetera.

A
Alba Morganti
Chief Financial Officer

Right.

U
Unknown Analyst

So it is that function. And in the same context, Alba, you said on one of the questions you answered that you wanted to see the cash position where it is now roughly. Can you explain that a little bit because you will contain more and more cash so...

A
Alba Morganti
Chief Financial Officer

Yes. Right. Well, definitely, the goal is to keep a good cash level as it is today. Therefore, also thanks to the good market condition to raise fund -- yes, to put in place a credit line at the moment is the right time. So that's what we are doing at the moment. So we aim to get to a syndicated loan facility to enable us to give -- to get sufficient liquidity without touching our own liquidity. So to have that on top that we can freely use.

U
Unknown Analyst

Okay. And then...

A
Alba Morganti
Chief Financial Officer

Sorry. And then, of course, the remaining part will be paid via our own cash generated by normal activity.

U
Unknown Analyst

Yes. Okay. And then a final one for Rudi. You talked about the perfect or the right product mix a few times. Could you explain a little bit what the perfect or the right product mix is exactly? And it's different by foundry, of course, but...

R
Rudi De Winter
MD. CEO & Director

Yes. So first of all, indeed, we have -- if we have, let's say, 200-millimeter CMOS demand, we cannot produce on our silicon carbide lines and so forth. So the product mix needs to be right with what we have planned. Sometimes, yes, we have customers who are running a specific process and they suddenly have demands for significantly more, and we have one dedicated machine for that, and we need another second machine. And then so -- but sometimes you have processes that have 100 steps and 1 specific step of these 100 steps is on a machine, which is a unique machine, then you need a second of this machine to be able to serve that demand. So these are the kind of -- things have to be right. And over time, if we have good forecast of our customers, we can anticipate this. And when we know this demand will come in 1 year or 2 years, we can invest in advance. But if -- sometimes we get surprises where suddenly things are increasing or coming in much faster because there is another company not able to deliver -- yes, things we can't plan.

U
Unknown Analyst

Okay. Perhaps, if I may, one last one on the medical. Could you say something more about the medical business, we see a sudden acceleration there. Are there new developments you could talk about?

R
Rudi De Winter
MD. CEO & Director

Well, the -- I'm happy about the development. So we have significant growth compared to last year. It's still somewhat lower than the fourth quarter last year, but we expect further good development in the third quarter on medical. And it's our plan, and that will be also further driven by the lab-on-chip products that are still running well.

Operator

[Operator Instructions]

R
Robert Duncan Cobban Sanders
Director

It's Rob from Deutsche Bank, again. Just a couple of housekeeping questions. Sorry about that. One is just, could you mention loading by site? I mean, I'm assuming you're pretty much fully loaded, except for Corbeil. Is that right? And is Corbeil like 90% loaded or 80%, if you could give any color on that? And then the second question would just be on the pricing environment. DIGITIMES is saying that 8-inch capacity price quote are up 40% in 2021. I was just wondering if you're taking the attitude to not maybe price aggressively versus to your 3-year, 4-year deals, are you willing to not think about prices going up that much?

R
Rudi De Winter
MD. CEO & Director

With respect to the capacity. So we are -- so there is on the one entity, the theoretical maximum machine capacity, which you can only, yes -- it depends on the product mixes, if they are right. But in Kuching in Malaysia, we're at high utilization. And all the other factories are also at a practical limit. However, they are not at the optimal limit. So there is still room for growth in all the factories based on -- making sure that the equipments are running at full utilization or optimally running 24/7 and having the right product mix there. And in the factory in Corbeil is also running maybe at 80% of the practical wafer starts. However, our goal is to convert this more and more to X-FAB core technologies. And then the second part of your question with respect to pricing. So yes, I already mentioned that we're increasing staff. We're adding significant CapEx for further growth to serve the demand of our customers. We have also increased costs on transportation and so forth. So yes, we are intending to charge that further to our customers.

Operator

[Operator Instructions] Okay. There are no further questions at this time. Please continue.

R
Rudi De Winter
MD. CEO & Director

Okay. Thank you very much everyone for participating to the call today, and I'm looking forward to meet you all in the call in 28th of October for discussing the third quarter results. Thank you, and have a nice evening.

A
Alba Morganti
Chief Financial Officer

Thank you. Goodbye.

Operator

Okay. That does conclude our conference for today. Thank you for participating. You may all disconnect.