Balanced View on X-FAB: Attractive Legacy-Node Positioning Offset by Capex, Cyclicality, and Chinese Capacity Risks, Justifying a Hold Rating

X-Fab Silicon Foundries SE (XFB) has received a new Hold rating, initiated by Bernstein analyst, Aleksander Peterc.

Aleksander Peterc has given his Hold rating due to a combination of factors that balance X-FAB’s attractive positioning with meaningful risks. He highlights that the company operates as a key, often sole-source, provider of legacy-node analog and mixed-signal foundry services for automotive, industrial, and medical applications, which supports long product lifecycles and relatively good business visibility. At the same time, he notes that this business model requires substantial capital expenditure and involves material execution risk, especially given the scale of the current capacity expansion program through 2026 and the uncertainty around its long-term return.

Peterc also points out that X-FAB is heavily exposed to cyclical swings in demand for mature-node technologies and has a concentrated customer base, factors that limit the risk-reward profile at the current share price. In his view, the company’s valuation, reflected in a price target of €5.50 that is close to the prevailing market price, already incorporates much of the upside from its growth and margin ambitions. Furthermore, he flags the rapidly expanding, subsidy-backed Chinese foundry capacity as a structural threat, as it could intensify price competition and erode X-FAB’s advantages over time, even if its European and US footprint offers some near-term protection. Taken together, these considerations lead him to a neutral stance, concluding that the stock is fairly valued rather than offering a clearly compelling opportunity at present.

According to TipRanks, Peterc is a 3-star analyst with an average return of 2.4% and a 52.68% success rate.

In another report released yesterday, TipRanks – OpenAI also reiterated a Hold rating on the stock with a €5.50 price target.