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CONTENTS
1.Letter to our stakeholders .....................
04
2.X-FAB at a glance .....................................
06
3.Our culture .................................................
08
4.Our business ..............................................
statements .................................................
developments .......................................
2Group structure ....................................
3Basis of preparation .............................
3.2Basis of measurement .................
currency ........................................
4.1Basis of consolidation ..................
customers .....................................
expenses .......................................
costs ..............................................
properties .....................................
4.7Employee benefits ......................
4.9Intangible assets ..........................
4.10Impairment ...................................
4.11Financial instruments ...................
4.13Inventories ....................................
4.15Equity ............................................
4.16Provisions .....................................
4.17Leases ...........................................
4.18Subsidies .......................................
4.19Income taxes ................................
5Business combinations ........................
6.1Revenue ........................................
6.2Cost of sales .................................
expenses .......................................
6.4Selling expenses ..........................
expenses .......................................
6.6Expenses by nature .....................
properties .....................................
6.9Other income ...............................
6.10Other expenses ...........................
6.11Finance income ............................
6.12Finance costs ...............................
6.13Income tax ....................................
6.14Earnings per share .......................
position ..................................................
7.2Intangible assets ..........................
Annual Report 2022 | Contents
2
7.3Inventories ....................................
7.5Other assets .................................
7.7Equity ............................................
7.8Dividends ......................................
7.10Loans and borrowings .................
current liabilities ...........................
7.13Provisions .....................................
flows .......................................................
9Segment reporting ...............................
11Leases ....................................................
13Other disclosures ..................................
13.1Purchase commitments and
contingencies ...............................
claims ............................................
13.3Employees ....................................
13.4List of shareholdings ...................
parent ............................................
remuneration ................................
X-FAB ..........................................................
6.1Scope .....................................................
6.1.1    X-FAB’s key environmental,
social, and governance (ESG)
goals ..............................................
81
6.1.2 Stakeholder engagement ............
6.1.3 Digital transformation ...................
84
6.2Environment ..........................................
responsibility ................................
management ................................
6.2.2.1Energy efficiency ............
6.2.2.2Water ................................
6.2.2.3Greenhouse gases ..........
6.3Social ......................................................
resources ...................................
6.3.2Social commitment ..................
6.4Governance ...........................................
6.4.2X-FAB’s supply chain ...................
suppliers ...........................
suppliers ...........................
minerals ............................
6.4.3Data Security ................................
6.5 EU taxonomy.........................................
7.1Shareholders .........................................
7.2Management structure ........................
7.3Board of Directors ................................
7.4Committees ..........................................
7.5Executive Management .......................
7.6Diversity policy ......................................
7.7Remuneration report ...........................
7.11Auditor ................................................
8.Shareholder information ........................
9.X-FAB SE statutory accounts ...............
10.Risk factors ................................................
11.Glossary ......................................................
3
Dear
stakeholders,
On behalf of the board of directors of X-FAB Silicon
Foundries SE, I have the pleasure of submitting to you
the annual report for the year ended December 31,
2022, which has been prepared in accordance with
articles 3:6 and 3:32 of the Belgian Code on
Companies and Associations (BCCA).
2022 has been another rollercoaster year. On the one
hand, I am very proud that – in the midst of various
challenges – X-FAB has had a successful twelve
months, laying a solid foundation for future growth and
stability. On the other hand, the world faced serious
challenges. In particular, the start of the war in Ukraine
was a major turning point in 2022 for all of us. It has
dramatically aggravated the world political situation
and continues to cause unimaginable suffering.
Combined with the lingering effects of the pandemic,
this has led to major disruptions in the global economy,
including an energy crisis, high inflation rates, and the
continued tightening of supply chains. In this
challenging environment, we have successfully
developed our business, and I would like to sincerely
thank all X-FAB employees for their unwavering
commitment to achieving the best results in
challenging times.
In 2022, X-FAB recorded revenues of USD 739.5
million. This represents an increase of 12% year on year,
well above the semiconductor industry’s average low-
single-digit growth. Order intake remained strong
throughout the year, consistently outpacing our
manufacturing capacity and resulting in an
unprecedented year-end backlog of USD 480.5
million.
Revenues in X-FAB’s core markets – automotive,
industrial, and medical – amounted to USD 618.0
million, which is an increase of 18% year on year,
reflecting the consistently strong demand in these end
markets. With this, we have also continued the
transformation of our business towards a higher share
of high value-added business with long lifecycles. The
proportion of total revenues accounted for by our core
business (automotive, industrial, and medical) further
increased in 2022 to 84% compared to 80% in the
previous year.
Electrification of everything is the key to meeting the
challenges of climate change and moving away from
fossil fuels. With our technology portfolio ranging from
silicon carbide (SiC) to high-voltage CMOS to on-chip
high-voltage isolation, we enable the development of
sustainable and energy-efficient products and are
perfectly positioned to support the transition to
electric mobility and renewable energy sources. On the
other hand, the digitization of medicine is becoming a
reality, and X-FAB continues to benefit from the
growing trend to use semiconductor technology for
advances in the prevention, diagnosis, treatment, and
monitoring of disease. Our combined CMOS and
MEMS capabilities enable a wide range of different
applications – from personal medical devices, such as
temperature sensors, hearing aids, or cochlear
implants, to x-ray or ultrasound applications and highly
complex lab-on-a-chip devices capable of DNA
sequencing, sepsis detection, or allergy testing.
That said, X-FAB is addressing major megatrends of
our time, and this has been fueling growth in all of our
key end markets. For the full year, automotive revenue
was USD 389.3 million, up 17% year on year, while
industrial revenue grew 19% to USD 172.9 million. Full-
year medical revenue was USD 55.8 million, an increase
of 16% over the prior year.
From a technology perspective, our SiC business has
been a major source of growth with annual revenues of
USD 54.5 million, up 61% year on year, while SiC
volumes produced in 2022 more than doubled
compared to the prior year. X-FAB’s CMOS business
recorded annual revenues of USD 609.4 million, up 9%
year on year, and MEMS revenues grew by 15% to USD
75.6 million in 2022.
Annual Report 2022 | Letter to our stakeholders
4
While revenue growth contributed positively to
X‑FAB’s financial results, this was partially offset by an
exceptional item related to arbitration proceedings
with a supplier. EBITDA for the full year was USD 134.9
million, down 12% year on year. This represents an
EBITDA margin of 18.2%. Excluding this one-off item,
the EBITDA margin would have been 23.4%. Thanks to
the natural hedging of our business, last year’s euro
weakness had no impact on earnings, and price
increases offset cost inflationary pressures.
2022 was another transformative year for the
semiconductor industry, driven by the severe and
prolonged chip shortage, which demonstrated the
strategic importance and high complexity of
semiconductor manufacturing. It caused all players in
the supply chain to fundamentally rethink the way they
do business, and X-FAB – for the first time in the
Company’s history – introduced long-term
agreements with its largest customers, covering a
significant share of its business. This provides stability
both for X-FAB to improve the visibility of its business
and for our customers, assuring them of their supplies.
For more than 90% of what we manufacture we are the
single source for our customer, which makes reliable
and sufficient supply key for X-FAB’s and our
customers’ success.
I am excited about how well X-FAB is positioned. Our
key end markets, particularly automotive and industrial,
are forecast to be the strongest growing segments
within the semiconductor industry over the next five to
ten years. Given the high demand we expect going
forward, supported by long-term customer contracts,
we have initiated a major investment program totaling
USD 1 billion over the next three years (2023–2025) to
expand manufacturing capacity at our existing sites.
Main projects include the capacity expansion at X-FAB
Sarawak, Malaysia, the continued conversion of
capacity at our French site to further ramp up the
automotive business, as well as the gradual expansion
of our SiC business in Lubbock, Texas. Furthermore,
we will expand capacity at our site in Dresden,
Germany, as well as the capacity for MEMS production
at our German sites in Erfurt and Itzehoe.
Semiconductor technology is critical to all sectors of
the economy, and we are proud to provide viable
solutions to the challenges of our time, most notably
climate change and a growing and aging population. At
the same time, semiconductor manufacturing is a
resource-intensive business.
To further strengthen our efforts to act responsibly
and integrate environmental and social considerations
into our daily business, we have committed to the
following long-term ESG objectives: We want to drive
innovation that contributes to sustainable products,
promote diversity and inclusion to ensure equal
opportunities for all employees, and reduce our carbon
footprint as well as the water consumption per stepped
mask layer we produce. More details can be found in
chapter six of this report.
X-FAB is well positioned for a successful future, and we
are fully focused on delivering on our commitments. I
look forward to the continued collaboration with all
employees, our customers, investors, and business
partners in 2023 and beyond, and thank you for the
trust you place in us.
After the close of 2022, there were no major events
that would require disclosure.
Best regards,
Rudi De Winter
CEO
5
6
7
3. OUR CULTURE
Diversity at X-FAB
Since its inception in 1992, X-FAB has grown to
become a global company with a strong presence in
Europe, North America, and Asia with more than 4,200
employees spread all over the globe. At X-FAB, you will
find an international and diverse working environment.
Our employees represent about 45 nationalities and
have varied cultural backgrounds. This makes working
at X-FAB an inspiring experience – across borders and
cultures. Nonetheless, we are well aware that our
customers expect excellent products and services
independent from nationalities and locations.
It is therefore essential to enable our employees –
no matter where they are located or come from –
to collaborate successfully.
What are we striving for?
OUR VISION
To be the foundry of choice for the analog world.
OUR MISSION
We are fully engaged to be the foundry of choice for
the analog world by focusing on innovative solutions
and manufacturing excellence that meet customer
expectations, enabling long-lasting success for all our
stakeholders.
Guiding us to success
Strong values build the basis for the success of X-FAB,
the way we work together, and how we interact with
each other and with our stakeholders. At X-FAB, we
put our clients and customers at the center of what we
do, and our values of integrity and respect, teamwork,
commitment, and innovation are guiding us every day
to live up to being a customer-oriented company.
X-FAB’s values are an integral part of corporate life.
New employees are introduced to X-FAB’s values in a
half-day Vision & Values workshop, and X-FAB’s
performance management process, designed to
encourage regular exchange between employees and
supervisors, draws attention to how the values are
being realized in our daily work.
In 2022, X-FAB launched a new series of leadership
training programs for managers and, for the first time,
applied the same training concept and leadership
principles at all X-FAB sites. These trainings focus on
purpose, business ethics, and leading high-
performance teams, enabling all executives to apply
the same principles to drive performance, teamwork,
and output.
Annual Report 2022 | Our culture
8
Social media highlights 2022
9
10
11
4. OUR BUSINESS
The specialty foundry business model
X-FAB is one of the world’s leading specialty foundry
groups for analog/mixed-signal semiconductor
technologies with a clear focus on automotive,
industrial, and medical applications. As a specialty
foundry, X-FAB provides manufacturing and strong
design support services to its customers that design
analog/mixed-signal integrated circuits (ICs) and other
semiconductor devices for use in their own products or
the products of their customers. As a pure-play
foundry X-FAB manufactures IC products based on
designs created by its customers or third parties in
cooperation and mostly based on X-FAB’s portfolio of
modular, highly specialized proprietary process
technologies and IP. The trend to further capture and
evaluate measured values in the real world generates
growing need for specialty foundry services.
Fig. 4.1: Value chains for foundries, fabless companies, and IDMs
The X-FAB Group has an established track record with
over 30 years of experience providing proprietary
manufacturing processes and advanced design and
engineering support offerings. Excellent service,
reliability, and first-class technical support: that’s what
X-FAB stands for.
Manufacturing excellence
X-FAB manufactures analog/mixed-signal ICs utilizing
its in-house developed process technologies.
A modular approach allows customers to choose from
a wide range of enhanced options across many
semiconductor technologies, designs and processes,
including complementary metal-oxide
semiconductor (CMOS), silicon on insulator (SOI),
silicon carbide (SiC), and micro-electro-mechanical
systems (MEMS). Customers can draw on a variety of
features in order to develop ICs specifically tailored to
their end-use requirements and to optimize product
performance, product size, power consumption, and
other parameters. Currently, the foundry offers
process technologies with feature sizes of 1.0μm,
0.8μm, and 0.6μm on 150 mm wafers and 0.6μm,
350nm, 180nm, and 130nm on 200 mm wafers. The
next generation 110nm process technology on 200 mm
wafers is under development and will enter production
in 2023.
The X-FAB Group operates six wafer manufacturing
sites in Germany, France, Malaysia, and the United
States, with aggregate production capacity of
approximately 100,000 200 mm equivalent wafer
starts per month (WSPM).
CMOS and SOI:
X-FAB’s open-platform technologies
The vast majority of X-FAB’s technologies are based
on CMOS, with SOI being a specialty variant offering a
so-called SOI layer for better technical performance
within certain electrical parameters. These processes
are available for all customers and include
performance-optimized primitive analog devices such
as low noise transistors, high voltage transistors (up to
700-volt breakdown voltage), or integrated sensor
elements such as optical sensor diodes.
Annual Report 2022 | Our business
12
X-FAB’s DNA: Analog/mixed-signal ICs
X-FAB produces microchips and other
semiconductor devices. These microchips and
devices prepare real-world signals from the analog
world (sensory data such as sound, light, pressure,
motion, temperature, etc.) for subsequent digital
processing or converting digital values into analog
signals. Mixed-signal circuits (also referred to as
“analog/mixed-signal ICs”)
embed both digital and analog circuitry onto a
single IC. With more and more electronic devices
interfacing with the “real world” (such as through
the Internet of Things, IoT), the demand for such
devices is growing continually, making mixed-signal
semiconductor ICs an increasingly important part of
the market for electronic equipment.
Fig. 4.2: X-FAB connects the real world with the digital world by enabling smart applications
Even though those open-platform technologies
typically address multiple applications and sometimes
more than one market, most of them are qualified for
automotive use and support high temperatures up to
175°C. In 2022, revenues based on X-FAB’s CMOS
technologies amounted to USD 609.4 million.
The Group owns all its technologies and the
corresponding IP. The extensive IP offering comes with
the option of customizing certain IP blocks, which
means that customers can combine X-FAB IP with
their own IP for optimized functionality. To enable fast
and easy design of new products, X-FAB also provides
process design kits (PDKs), libraries with digital and
analog circuit elements, and complex IP blocks such as
embedded flash memories, related software, and
consultancy services.
X-FAB’s technology portfolio (see Figure 4.3) spans
geometries from 110nm to 1.0μm. The mature
technologies down to the 180nm node provide very
rich feature sets and thus enable a wide range of
applications. X-FAB’s approach to extending this
portfolio is driven by customer demand to enable
further fields of use. The feature set for the 130nm
node is optimized for radio frequency (RF)
applications, while the 110nm process technology is
geared towards automotive use and will be
progressively extended. New process nodes will be
added eventually.
To mention a few examples: the current 180nm SOI
technology is able to operate voltages up to 375 volts,
which is crucial for medical ultrasound equipment.
Integrated optical sensors enable light curtain safety
devices for automated factories. Embedded flash
memories, which are qualified for automotive
applications and support high temperatures, are suited
for controller ICs placed in a car close to the engine.
13
Fig. 4.3: X-FAB open platform process portfolio and features
Advantages of X-FAB’s specialized technologies
The feature set of a particular technology node is
extended over time, enabling a very wide range of
applications, which in turn increases the number of
customers adopting the technology. For example,
X‑FAB’s 180nm BCD-on-SOI technology has special
structures on the chip called deep trench isolation
(DTI) that make the process suitable for operation at
high voltages. DTI allows driver circuits operating at
375 volts to be placed alongside sensitive amplifiers
processing low voltages of a few mV. To prevent
interference and crosstalk, DTI can also be placed
between separate low-voltage circuits.
X-FAB supports the automotive quality standard AEC-
Q100 grade 0, allowing the development of ICs that
can be used at temperatures of up to 150°C. Such high
temperatures can occur close to the combustion
engine in hybrid electric vehicles, in battery
management systems or close to the inverter of
electric vehicles.
By the subsequent integration of noble metal
electrodes onto CMOS wafers, X-FAB creates
interface structures for biological material. These
electrodes allow the chips to measure physiological
parameters of a biological sample without influencing
the sample itself. At the same time, corrosion or
deterioration of the chip through interaction with the
sample is prevented. Noble metal electrodes make
CMOS chips biocompatible.
Silicon carbide (SiC) as the crystalline compound of
silicon and carbon has advantages over elemental
silicon when used in power technologies. Due to their
special material properties, components manufactured
in SiC offer higher efficiency in power conversion,
fewer losses, and high temperature operation. These
advantages result in more energy-efficient systems
with reduced size, weight, and cost. In the case of
energy supply, this means that more energy reaches
the consumer, which in the case of electric cars leads
to greater driving range.
2022 R&D highlights include:
•development of X-FAB’s new 110nm automotive
technology platform as successor to its very
successful 180nm BCD-on-SOI. Samples of first
product including embedded Flash memory
shipped to lead customer;
•expanding the maximum voltage of X-FAB’s 180nm
BCD-on-SOI technology to enable 375V
applications that enable ultrasound probe heads for
high-resolution medical imaging;
•lead customer of the world’s first single-molecule
protein sequencing platform based on X-FAB’s
photonics process announced commercial
availability;
•customer prototypes of the X-FAB Integrated
Passive Devices (XIPD) process show promising
results as a cost-effective integration solution for
complex RF systems;
•second-generation single photon avalanche
photodiode (SPAD) devices with increased photon
detection probability (PDP) and first working
samples of spectral filters for the lead customer of
the spectral sensing development project;
•continued enhancement of process technologies,
design libraries, and design IP, including the release
of embedded Flash fully compliant with stringent
AEC100-grade 0 automotive specification and a
circuit design reference kit with the world’s leading
EDA vendors;
•increased sales and marketing activities in China,
resulting in strong adoption of X-FAB’s SiC
technologies; and
Annual Report 2022 | Our business
14
•18 new patent applications and 31 patents were
granted in 2022, contributing to an overall patent
portfolio of more than 451 patents and patent
applications.
MEMS: Interface to the physical world
MEMS, or micro-electro-mechanical systems, build the
interface between mechanical properties and
electronics. Complex processes are used to produce
structures or components in silicon that convert
mechanical variables, such as pressure or acceleration,
into electrical signals. MEMS devices can be found in
products or modules such as airbags or inkjet printer
heads. The development of MEMS products differs
from the development of integrated circuits in that
usually the manufacturing process has to be adapted
to the specification of the final product. This leads to
higher development costs and longer development
times, but also offers the opportunity to bring products
with unique features and strong intellectual property
protection to the market, as a lot of know-how goes
into the manufacturing process.
MEMS product manufacturing also requires the use of
materials that are not used in integrated circuit
manufacturing or are even undesirable because they
would contaminate manufacturing lines. These are the
reasons why manufacturers either focus exclusively on
MEMS product manufacturing or, like X-FAB, run
separate facilities for the manufacturing of CMOS and
MEMS wafers.
X-FAB decided to using these existing capabilities to
expand MEMS to include medical and biological
phenomena. This expansion, along with X-FAB's
willingness to respond to customer needs and take on
additional manufacturing steps in the supply chain, is
the cornerstone of a very successful MEMS business.
X-FAB’s MEMS business, which recorded revenues of
USD 75.6 million in 2022, is built on three pillars:
•sensors and actuators;
•silicon-based microfluidics; and
•3D/heterogeneous integration.
Sensors and actuators have been the traditional
application types of MEMS, and X-FAB builds on its
established processes to further develop business in
this field. X-FAB offers next generation sensor
technologies for relative and absolute pressure
sensors for all kinds of media, including corrosive and
high-temperature environments. X-FAB further
provides a proprietary open platform technology
(XMB10) for inertial sensing covering both
accelerometers and gyroscopes in the X, Y, and Z axes.
By making it available through EUROPRACTICE, the
European initiative for low-entry design and fabrication
of electronic circuits, this technology is gaining traction.
Gas and flow sensors are based on X-FAB’s well-
established noble-metal processes, resulting in very
small sensor devices, while temperature sensors apply
the thermopile principle, requiring a well-controlled
etching process. This more established part of X-FAB’s
MEMS business is characterized by continuous
improvement, both technologically and operationally.
At the same time, X-FAB invests in disruptive
technologies. Jointly with a lead customer, X-FAB
developed an integrated thermopile solution for
contactless temperature measurement, providing size
reduction for smaller form factors and at the same
time providing medical grade accuracy. The first
product based on this technology won the 2019 Best
of Sensors Awards and generated significant turnover
in the first years of production. The second generation
of this sensor is under development, which will address
an even wider range of applications and new classes of
wearable health products with a smaller form factor.
Another area for investment is the concept to process
the piezoelectric material aluminum nitride for
applications such as precision dosing of minute
amounts of liquids.
In the long term, the latter technology could also be
used for silicon-based microfluidics, already a
designated focus area for X-FAB. For microfluidic
devices that are built on integrated circuits, X-FAB
provides an offer to augment its 350nm and 180nm
CMOS processes with dedicated materials or
structures. This offer includes the fabrication of inert
electrodes for contact of the chip with a biological
substance, polyamide layers to form channels, cavities
to hold the samples, and glass lids to seal the
microfluidic structures.
The combination of robust analog/mixed-signal CMOS
technologies with the opportunities offered by post-
processing dedicated to medical applications is
attracting great attention in the marketplace. X-FAB’s
customer base ranges from established companies
expanding into new application areas to start-up
companies with innovative approaches to leverage the
integration of integrated circuits and microfluidic
structures on one lab-on-a-chip device. The platform
approach that X-FAB is taking enables it to offer a
wide range of applications, leading to an extremely
dynamic business development and revenue growth.
X-FAB will further invest in development and facilities
that will enable it to offer complete solutions to its
medical customers.
Further capabilities of X-FAB’s MEMS business unit
include 3D integration and wafer level packaging.
Through-silicon vias (TSVs) are one of the key
technologies for 3D stacking of integrated circuits.
X‑FAB enables this product-specific processing step
for its foundry customers and successfully operated
multiple prototyping runs on selected devices. For the
assembly of microcomponents on top of other chips or
substrates, the technology of micro-transfer-printing
is in development. Further ways to integrate
heterogeneous electronic component concepts for
system in package (SiP) are in concept phase. The first
15
customer products utilizing one of the aforementioned
technologies were launched in the middle of 2022.
In line with customer demand, all activities described
above are aimed at expanding X-FAB’s value creation
along the supply chain. The close cooperation with
X‑FAB's customers and their strong commitment,
which is reflected by the high prototyping revenue of
the business unit MEMS, lead us to expect a successful
future for these activities.
Silicon carbide: High power for a high-growth
market
At the point X-FAB entered the SiC business it was the
first pure-play foundry for wide bandgap material and
is to date the leading foundry supplier for SiC
technologies. Following the positive trend of the
previous years , X-FAB’s SiC business recorded a
tremendous revenue growth of 61% in 2022.
SiC is a semiconductor substrate that, thanks to its
material properties, supports the global trend to
reduce greenhouse gas emissions. In the transition to
CO2 emissions-free mobility and transport, devices
manufactured in SiC address two of the main
challenges: driving range and charging time. By using
SiC for components in the power train of electric
vehicles, the driving range achievable with one battery
charge can be increased by approximately 9%.
Similarly, used in charging infrastructure, SiC enables
high-power, high-speed DC charging, allowing electric
vehicles to travel further and faster.
SiC is an already established material for components
in the energy sector. An increasing number of suppliers
are moving towards greener and more sustainable
energy technologies. At the same time the demand for
electricity is growing dramatically, creating an ever-
growing market for these components. SiC transistors
are a core component in systems for power generation
from renewable sources such as photovoltaic or wind
energy. SiC also enables huge energy savings in power
supplies for data centers, computers, chargers for
mobile phones, and devices for the Internet of Things.
The majority of devices manufactured in silicon carbide
are offered by integrated device manufacturers (IDM)
designing, manufacturing, and selling semiconductor
components under their own brand. X-FAB decided to
offer silicon carbide processing capabilities to a variety
of customers, strictly following its business model as a
specialty pure-play foundry. Customers are enabled by
X-FAB to develop solutions based on their own
specifications to differentiate and compete in the
market.
X-FAB’s success as the number 1 foundry for SiC is
built on four pillars:
•secure supply chain;
•leading technology offer;
•economy of scale; and
•trusted partnership.
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Customers sourcing SiC wafers from X-FAB can rely
on the supply chain that has been established for the
entire foundry business for over 30 years. The access
to leading technology in services, equipment, and
processes enables them to create outstanding device
performance. The existing foundry infrastructure
ensures ramping to production volumes individually
suited to any respective customer and product need.
Finally, through its business model, X-FAB will never
compete with its customers by selling components or
modules under its own brand. This trusted partnership
is a cornerstone of X-FAB’s success as pure-play
foundry.
Since the launch of its foundry offer for silicon carbide,
X-FAB has achieved a number of successes. For the
broad technology platform that was established in
recent years, X-FAB provides standard process blocks
supporting customers in the development of diodes
and transistor products. A state-of-the-art tool set is
available for all relevant process steps, enhanced with
next-generation processing capabilities. This has
enabled the thinning of wafers or metal layers,
improving the solderability of the final product. X-FAB
has established collaborations with design houses that
can support customers during product design and has
built an extensive processing knowledge base that will
support each customer with their individual process.
X-FAB has established long-term partnerships with its
customers and is supporting more customers than
ever. The majority of the non-IDM suppliers of SiC
devices are choosing X-FAB as their manufacturing
site. Also, smaller IDMs leverage the additional capacity
offered by X-FAB for their products.
The SiC processes are complementing X-FAB’s offer
for power electronics in the automotive and industrial
markets. A growing number of customers using
X‑FAB’s SiC technology, strong growth in prototyping
revenue, and increasing production volumes from a
variety of customers supports the promising outlook
for this part of X-FAB’s business.
SiC revenues for the full year came in at USD 54.5
million, a 61% growth compared to the previous year, as
more customers started volume production. With the
strong pull from the market, X-FAB is adding more
SiC-related equipment, extending its SiC capacity and
capabilities further.
Customer orientation: Long-standing
relationships and strong product
customization
Fig. 4.4: X-FAB’s customer count by annual revenue. X-FAB
has grown to a diverse base of 438 customers worldwide
The majority of X-FAB’s customers are fabless
semiconductor companies (often also called fabless
houses): companies that have no own manufacturing
and process technology expertise but rely on foundries
for those services and related expertise. A smaller
portion of X-FAB’s customer base are either original
equipment manufacturers (OEMs) or integrated
device manufacturers (IDMs).
X-FAB has a diverse base of 438 customers
worldwide and continually wins new customers in its
core markets (see Figure 4.4).
Due to the high degree of product customization
usually required by customers, a specialty foundry is
less vulnerable to extreme price and demand volatility
experienced by many competitors in the broader
foundry market. X‑FAB’s focus on highly customized
analog/mixed-signal ICs results in smaller production
volumes per each product and requires more
engineering input per unit creating a high value-add for
the customer.
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The long-term availability of these high-quality
products is essential for X-FAB’s customers, since
X‑FAB is the sole source for more than 90% of the
products it manufactures. This is an important aspect
contributing to long-lasting customer loyalty. Most of
the customer products are designed using X-FAB
proprietary process technologies and design IP, and it
would require significant effort by the customer to
migrate products to other foundries, an effort that
would often be equivalent to a new development.
The global chip shortage that was observed in 2022
put more focus on the supply chain of the
semiconductor industry and led to the realization that
semiconductors are strategic for many products of
today's life including cars, industry equipment and
medical devices. To ensure mutual planning security
X‑FAB signed long-term agreements (LTAs) with
some customers which include a commitment to
deliver and a commitment to buy certain wafer
quantities. These LTAs typically have a term of three
years.
The LTAs give X-FAB the necessary security for
investments into capacity expansions in all of its
factories. X-FAB will invest up to USD 1 billion in the
next three years. An expected impact of the LTAs is
the mitigation of the large swings in the semiconductor
industry caused by the long lead times and the closure
of factories.
Fig. 4.5: Illustrative lifecycle for automotive: Analog/mixed-signal products are much more specialized for their applications and are
used for many years
By providing a wide range of design-related product
and support services as part of its comprehensive
offering, including engineering, technical, and design
support, X-FAB typically has strong, long-lasting
relationships with its customers. Through special offers,
like post-processing of CMOS ICs and sensors, X-FAB
accomplishes significant manufacturing steps, creating
valuable benefits for its customers.
Those long-standing customer relationships are crucial
because a large portion of the products manufactured
by X-FAB have long product lifecycles of ten or more
years. For example, X-FAB’s first medical MEMS
product, a sensor used to monitor blood pressure, has
been in production for more than 25 years.
Best-in-class support: X-FAB’s close
relationships with customers
X-FAB aims to differentiate its business through
unique technologies combined with excellent technical
support. A strong asset of X-FAB is its close
collaboration with customers in every phase of an IC
product lifetime. From a request for a quotation and
the selection of the best suited process technology to
the start of volume production, X-FAB has dedicated
teams to assist its customers with technical,
commercial, and logistical support and consultation.
Fig. 4.6: Assignment of X-FAB teams to every phase of an IC product lifetime
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X-FAB’s strategic markets
X-FAB serves the markets for automotive, industrial,
and medical (AIM) applications. The AIM market
segments all share the same requirements for quality
and reliability and feature similar long product lifetimes.
Consequently, X-FAB places strategic focus on AIM
while selling into the market for consumer,
communications, and computer (CCC) products
when product requirements demand technologies that
are within X-FAB’s portfolio. Despite this, and mainly
because of the high demand for chips for the
automotive industry, sales of CCC products declined in
2022. The freed-up capacities were immediately used
for the production of automotive products.
After the global Covid-19-driven recession in 2020 the
demand for semiconductors recovered rapidly in 2021,
a trend that has continued into 2022.
The strong growth in demand was caused by several
factors from a rising number of automotive ICs per
new car, to increasing sales of devices for the Internet
of Things and a broader proliferation of medical
electronics. Given the industry-wide trend, X-FAB’s
automotive business grew by 17%. While a similar surge
was seen in the industrial semiconductor market,
X‑FAB’s industrial business was fueled by high demand
for SiC applications, recording a revenue increase of
19% compared to 2021. At the same time, revenues
achieved with medical semiconductors grew by 16%.
X-FAB enables innovative solutions to address global
challenges such as:
•global warming;
•the replacement of fossil energy by sustainable
energy; and
•the cost of healthcare and an aging population.
X-FAB is confident of success due to its:
•close collaboration with market leaders in various
segments;
•ongoing investment in new technologies;
•wide portfolio of technologies and capabilities; and
•strong pipeline of projects in prototyping stage.
Automotive electronics – We think
automotive
Product reliability and established trust in suppliers are
two key prerequisites for successfully serving the
automotive industry. ICs produced at X-FAB can be
found everywhere in a car: in the interior as well as
under the hood. Functions directly accessible to the
driver such as control of the interior lighting, hands-
free phone kits, and parking assistance, as well as
battery management, tire pressure monitoring, and
anti-lock braking systems, are all exploiting X-FAB
technologies.
All these new technologies combined are leading to a
sharp increase in the number of semiconductor
devices in a car. The number of chips in a car is
expected to triple in the next few years, with demand
for analog chips growing much faster than demand for
microcontroller units (MCU). On average, there are
several 100 analogue chips per car, but only about ten
MCUs, a situation from which X-FAB benefits
particularly strongly.
With CMOS, BCD-on-SOI, and SiC, X-FAB provides
the right technology mix and focuses on chips sensing
the “real world” and processing analog signals.
The electrification of cars requires intelligent solutions
for battery management and charging. Batteries for
electric vehicles consist of several thousand individual
battery cells, each of which needs to be monitored by
the so-called battery management systems (BMS).
The temperature, the voltage, and the charge of each
cell must stay in an optimal range. The better this is
managed, the further the car can drive.
Typically, a BMS has about eight ICs to manage the
battery. X-FAB’s analog-mixed signal processes with
their high-voltage and high-temperature capabilities
and their rich portfolio of IP including embedded Flash
memory are particularly well suited for this. Transistors
manufactured at X-FAB's SiC foundry enable inverters
with higher efficiency and contribute to increased
range on a single battery charge.
Safety in traffic will be improved by sophisticated
techniques of collision prevention, distance control,
lane change assistance, and blind spot detection,
ultimately paving the way for autonomous driving. The
increasing relevance of environmental protection is
leading to innovations to improve fuel efficiency and
reduce pollution of hybrid vehicles. Connected cars will
be enabled by the advent of 5G cellular mobile
networks.
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This growing need for semiconductor products for cars
led to a highly visible shortage in analog chip supply,
which had a negative impact on light vehicle
production. Due to the high number of chips that are
manufactured on a wafer, the lack of only one wafer
can cause up to 10,000 cars to not be finished.
Analyses consistently show that while the bottleneck
for leading-edge technologies for MCUs seems to be
overcome, the shortage of chips in technologies with
node sizes of 40nm and bigger will persist in the
coming years. The situation will hardly change, as there
is low investment in equipment to produce wafers with
a diameter of 8 inches, which is why X-FAB’s
investments in capacity expansion will further
strengthen its position as the prime foundry for
automotive ICs.
X-FAB actively supports its lead customers in driving
automotive innovation in electronics. Among the
described growth areas, the electrification of vehicles
might be the biggest technology shift the automotive
industry has ever seen. By 2040 electric vehicles will
represent about 70% of global light duty vehicle sales,
according to Bloomberg. As cars become more and
more sophisticated X-FAB will be right there to
develop the technologies to make it happen.
Fig. 4.7: Main areas of automotive applications
Industrial electronics – We empower
the future
The market for application-specific analog ICs for
industrial applications is a highly fragmented market
spanning applications from avionics to factory
automation. About 60% of X-FAB’s current customers
in production address the industrial market and rely on
X-FAB’s ability to provide volume production over a 10
to 15-year period. Four global megatrends are driving
the next industrial revolution and will change our way of
producing, consuming, and living: Industry 4.0 with an
end-to-end connected value chain; factory
automation including industrial IoT, robots, machine-
to-machine communication; smart cities, enabling
central building management and improving urban
lives through interaction and management of
connected services; and, finally, sustainable energy
through exploiting renewable sources of energy and
improving power management.
X-FAB is positioned to play a major role in addressing
those megatrends based on its commitment to
industrial markets and customers. The Group’s
competitive advantages rely on four pillars:
•Easy to work with. Collaboration with X-FAB is made
easy for industrial customers as X-FAB can
efficiently handle small to medium volumes often
required for industrial applications.
•Design support. X-FAB provides comprehensive
design support and high-quality IP to achieve first-
time-right design. For industrial customers that
want to outsource their IC design efforts, X-FAB
maintains a global partner network of service
providers for design, test, assembly, and supply
chain management.
•X-FAB’s quality systems. X-FAB’s automotive
technologies fit well with most industrial
applications, which often also operate in harsh
environments.
•X-FAB is a reliable foundry partner. X-FAB is a
trusted supplier and has built long relationships with
its industrial customers.
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•
Fig. 4.8: Main areas of industrial applications
Medical electronics – We save lives
The chips X-FAB manufactures for medical
applications are used in equipment or devices where
people, doctors, and patients depend on reliable,
accurate, and error-free operation or data. X-FAB
delivers chips for personal medical devices from
cardiac pacemakers and spinal cord stimulators to
traditional and implanted hearing aids. X-FAB’s
specialized technologies can be found in equipment
for medical imaging technologies such as ultrasound
and X-ray sensors.
A trend for the next few years is the evolution of
consumer wearables with the aim of medical
precision, offering the user actionable insights into her
or his physical conditions.
Fig. 4.9: Main areas of medical applications
Implantable devices are very important for patients
with chronic diseases, and research in this area will
continue to provide new therapies, for example for
rheumatism, strokes, or obesity. Portable devices will
move medical imaging from hospitals and medical
practices to patients’ homes for point-of-care testing.
Further trends in ultrasonic imaging are wireless probe
heads and 3D imaging.
With the rapid decline in the costs of DNA sequencing
since the availability of next-generation sequencing
technology in 2007, new uses have been introduced
for health care, industry, and research. There are not
only companies that offer genetic testing as a service,
DNA sequencing is also being used for the analysis of
pathogens helping to contain epidemics as well as the
examination of food to identify contamination or
allergens. The availability of affordable genetic
information is pushing the development of
personalized medicine, with great benefits for patients
and huge potential for cost-saving in the health care
sector as a result of more effective therapies. Lab-on-
a-chip or microfluidics are devices to handle minute
quantities of liquids or biomaterial, usually on a chip or
in a small cavity. That is where X-FAB’s capability to
combine CMOS and MEMS is a key benefit.
Manufacturing steps, for which customers initially had
to engage with several suppliers, are now provided by
X-FAB exclusively.
According to market research, the lab-on-a-chip
market is expected to grow at a CAGR of up to 14%
over the next five years.
Connecting the two worlds of
microelectronics and microfluidics
Biological and pharmaceutical research is making
significant progress by leveraging from advances in
silicon technology. Lab-on-a-chip devices created by
integrating microfluidic structures onto silicon chips are
essential parts of many cartridges in today’s lab
equipment. CMOS chips that are capped with glass or
have antibodies applied to their surface are used to
directly analyze biological samples. The miniaturization
significantly reduces the size of the probe to just a few
microliters while at the same time shortening the
duration of the test. As a result, smaller and lighter
devices can be developed to analyze samples on site,
for example at the patient’s home. The Covid-19
pandemic drastically showed the need for fast and
cost-effective testing. DNA sequencing is required to
investigate viruses and identify mutations. The
detection of pathogens in a blood sample or the
investigation of individual cells to monitor their reaction
to pharmaceuticals are other uses of this technology.
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Consumer, communications, and computer –
We connect people
X-FAB entered the mobile communications market
with a clear vision: connecting mobile devices with the
real world. With this vision in mind, X-FAB became a
leading foundry provider for discrete and integrated
mobile sensor solutions. X-FAB’s processes enable
communication and consumer applications that make
our lives smarter, greener, and safer.
Specialized technologies enable optical sensors,
camera autofocus, haptic drivers, touchscreen
controllers, and gesture recognition solutions to create
intuitive user interfaces that guarantee a great mobile
experience. X-FAB’s RF SOI technology enables high-
performance 5G and WLAN RF front-end modules by
meeting stringent requirements for both mobile
phones and infrastructures. Smart home use
applications such as lighting or air climate control and
home automation for the elderly and disabled are
made possible thanks to X-FAB’s RF technologies.
Devices for augmented reality (AR) and virtual reality
(VR) require a multitude of sensors, analog/mixed-
signal chips, and wireless connectivity. X-FAB’s high-
voltage CMOS and SOI technologies enable enhanced
power management solutions to improve the energy
efficiency of consumer devices, communication
infrastructure, and computers. Examples where chips
manufactured by X-FAB help to reduce power
consumption, optimize battery lifetime, and prolong
device usage are AC/DC chargers, 5G base station
switches, or battery management ICs for power tools
applications.
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5. X-FAB CONSOLIDATED
FINANCIAL STATEMENTS
5.1 Summary of important developments
Revenue and results
The Group’s total sales revenue in 2022 amounted to
USD 739,469 thousand (2021: USD 657,751 thousand),
an increase of 12% compared to the previous year. The
Group recorded a net profit in 2022 of USD 52,491
thousand compared to a net profit of USD 83,640
thousand in the previous year.
Gross profit increased from USD 149,978 thousand in
2021 to USD 175,954 thousand in 2022 as a result of
the Group’s increased sales revenues and improved
profit margin. This was offset by non-recurring effects
of the settlement of an arbitration agreement in 2022
of USD 36,811 thousand, associated interest penalties
of USD 12,624 thousand, and legal costs of USD 1,271
thousand (note 6.10) and the non-recurring effects of
the USD 6,563 thousand recognized as a deduction
from cost of sales representing a loan forgiven under
the “Paycheck Protection Program” under the U.S.
federal government’s Coronavirus Aid, Relief, and
Economic Security Act during the pandemic in 2021
(notes 6.2 and 7.10).
There have been no significant effects on the Group’s
balance sheet or any significant effects on the carrying
value or fair values of financial instruments arising from
the Covid-19 pandemic or the war in Ukraine.
Cost of sales
Cost of sales includes material expenses such as raw
materials, the costs of maintaining fixed assets,
depreciation, staff costs, and costs incurred for
external production-related services. In 2022, cost of
sales increased by USD 55,742 thousand, representing
an increase of 11% compared to the previous year which
corresponds with the increase in sales in 2022.
Research and development expenses
Research and development expenses amounted to
USD 40,803 thousand in 2022, representing 6% of
revenue (2021: 5%). Compared to the previous year
the research and development expenses increased by
19%. The Group’s research and development activities
focus on development of new fabrication processes,
optimization of existing processes using the Group’s
key process technologies, and development of new
integrated circuit features in order to meet customers’
analog/mixed-signal needs.
General, administrative, and selling expenses
General, administrative, and selling expenses increased
by 12% in 2022.
Financial result
The Group’s net financial expense (finance costs less
finance income) increased by USD 15,947 thousand
from a net expense of USD 4,326 thousand in 2021 to a
net expense of USD 20,273 thousand in 2022. This
increase was primarily attributable to the settlement of
the arbitration award described above and discussed in
more detail in note 6.10.
5.2 Statement of the Board of Directors
The Board of Directors certifies, on behalf and for the
account of the Company, that, to their knowledge,
•the consolidated financial statements, which have
been prepared in accordance with IFRS as adopted
by the EU, give a true and fair view of the assets,
liabilities, financial position, and profit or loss of the
Company and the entities included in the
consolidation as a whole; and
•the annual report provides a fair view of the
development and results of the Company and the
companies included in the consolidation, as well as
a description of the main risks and uncertainties
that they are exposed to.
5.3 Statutory auditor’s report to the general
meeting of X-Fab Silicon Foundries SE on the
consolidated financial statements as of and
for the year ended December 31, 2022
In the context of the statutory audit of the
consolidated financial statements of X-Fab Silicon
Foundries SE (“the Company”) and its subsidiaries
(jointly “the Group”), we provide you with our statutory
auditor’s report. This includes our report on the
consolidated financial statements for the year ended
December 31, 2022, as well as other legal and
regulatory requirements. Our report is one and
indivisible.
We were appointed as statutory auditor by the general
meeting of April 30, 2020, in accordance with the
proposal of the board of directors issued on the
recommendation of the audit committee. Our
mandate will expire on the date of the general meeting
deliberating on the annual accounts for the year ended
December 31, 2022. We have performed the statutory
audit of the consolidated financial statements of the
Group for 15 consecutive financial years.
Annual Report 2022 | X-FAB consolidated financial statements
26
Report on the consolidated financial
statements
Unqualified opinion
We have audited the consolidated financial statements
of the Group as of and for the year ended December
31, 2022, prepared in accordance with IFRS Standards
as issued by the International Accounting Standards
Board and as adopted by the European Union, and with
the legal and regulatory requirements applicable in
Belgium. These consolidated financial statements
comprise the consolidated statement of financial
position as at December 31, 2022, the consolidated
statements of profit or loss and other comprehensive
income, changes in equity and cash flows for the year
then ended and notes, comprising a summary of
significant accounting policies and other explanatory
information. The total of the consolidated statement
of financial position amounts to  USD 1.255.057
thousand and the consolidated statement of profit or
loss and other comprehensive income shows a profit
for the year of USD 52.491 thousand.
In our opinion, the consolidated financial statements
give a true and fair view of the Group’s equity and
financial position as at December 31, 2022 and of its
consolidated financial performance and its
consolidated cash flows for the year then ended in
accordance with IFRS Standards as issued by the
International Accounting Standards Board and as
adopted by the European Union, and with the legal and
regulatory requirements applicable in Belgium.
Basis for our unqualified opinion
We conducted our audit in accordance with
International Standards on Auditing (“ISAs”) as
adopted in Belgium. In addition, we have applied the
ISAs as issued by the IAASB and applicable for the
current accounting year while these have not been
adopted in Belgium yet. Our responsibilities under
those standards are further described in the “Statutory
auditors’ responsibility for the audit of the consolidated
financial statements” section of our report. We have
complied with the ethical requirements that are
relevant to our audit of the consolidated financial
statements in Belgium, including the independence
requirements.
We have obtained from the board of directors and the
Company’s officials the explanations and information
necessary for performing our audit.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our
opinion.
Key audit matter
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the consolidated financial statements of
the current period. These matters were addressed in
the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters.
Valuation of deferred tax assets
We refer to note 4.19 of the consolidated financial
statements for the accounting policies relating to
deferred taxes and to note 6.13 for the disclosures
relating to deferred taxes as at December 31, 2022.
Description
The X-Fab Group, which is subject to various tax
jurisdictions and resulting obligations, has a significant
amount of unused tax losses carried forward (USD
198,0 million) and deductible temporary differences
(USD 245,7 million) and has recognized deferred tax
assets of USD 68,0 million as at December 31, 2022.
Deferred tax assets are recognized only to the extent
that it is probable that sufficient future taxable profits
will be generated, against which the unused tax losses
carried forward and deductible temporary differences
can be utilized. Significant judgement is required to
assess the amount of probable future taxable profits
that support the recognition of deferred tax assets.
Our audit procedures
In collaboration with our own tax specialists, we have
assessed the Group’s ability to utilize the deferred tax
assets. Our procedures included:
•Obtaining the forecasted taxable income in the
various tax jurisdictions and reconciling these to the
latest budget and forecasts approved by the board
of directors;
•Assessing the consistency and reliability of the
Group’s approach to budgeting by comparing
historical budgets to actual results;
•Challenging management’s key assumptions used
in its budget and forecasts, such as projected
growth rates, by comparing them with our own
expectations derived from our knowledge of the
industry and our knowledge gained during our
audit;
•Recalculating independently the deferred tax
assets which comprise a combination of temporary
differences between tax and accounting values as
well as available tax losses;
•Assessing whether deferred tax assets had been
appropriately recognized in the consolidated
financial statements as at December 31, 2022
based on the extent to which they can be
recovered by future taxable profits; and
•Assessing the adequacy of the relevant disclosures.
27
Board of directors’ responsibilities for the
preparation of the consolidated financial
statements
The board of directors is responsible for the
preparation of these consolidated financial statements
that give a true and fair view in accordance with IFRS
Standards as issued by the International Accounting
Standards Board and as adopted by the European
Union, and with the legal and regulatory requirements
applicable in Belgium, and for such internal control as
the board of directors determines, is necessary to
enable the preparation of consolidated financial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, the
board of directors is responsible for assessing the
Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of
accounting unless the board of directors either intends
to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Statutory auditor’s responsibilities for the audit of
the consolidated financial statements
Our objectives are to obtain reasonable assurance as
to whether the consolidated financial statements as a
whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of the users taken on the basis of
these consolidated financial statements.
When performing our audit we comply with the legal,
regulatory and professional requirements applicable to
audits of the consolidated financial statements in
Belgium. The scope of the statutory audit of the
consolidated financial statements does not extend to
providing assurance on the future viability of the
Group nor on the efficiency or effectivity of how the
board of directors has conducted or will conduct the
business of the Group. Our responsibilities regarding
the going concern basis of accounting applied by the
board of directors are described below.
As part of an audit in accordance with ISAs, we exercise
professional judgement and maintain professional
skepticism throughout the audit. We also perform the
following procedures:
•Identify and assess the risks of material
misstatement of the consolidated financial
statements, whether due to fraud or error, design
and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control;
•Obtain an understanding of internal controls
relevant to the audit in order to design audit
procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the
Group’s internal control;
•Evaluate the appropriateness of accounting
policies used and the reasonableness of accounting
estimates and related disclosures made by the
board of directors;
•Conclude on the appropriateness of the board of
directors’ use of the going concern basis of
accounting and, based on the audit evidence
obtained, whether a material uncertainty exists
related to events or conditions that may cast
significant doubt on the Group’s ability to continue
as a going concern. If we conclude that a material
uncertainty exists, we are required to draw
attention in our auditors’ report to the related
disclosures in the consolidated financial statements
or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditors’
report. However, future events or conditions may
cause the Group to cease to continue as a going
concern;
•Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the
consolidated financial statements represent the
underlying transactions and events in a manner that
achieves fair presentation;
•Obtain sufficient appropriate audit evidence
regarding the financial information of the entities or
business activities within the Group to express an
opinion on the consolidated financial statements.
We are responsible for the direction, supervision
and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with the audit committee regarding,
among other matters, the planned scope and timing of
the audit and significant audit findings, including any
significant deficiencies in internal control that we
identify during our audit.
We also provide the audit committee with a statement
that we have complied with relevant ethical
requirements regarding independence, and to
communicate with them all relationships and other
matters that may reasonably be thought to bear on our
independence, and where applicable, related
safeguards.
Annual Report 2022 | X-FAB consolidated financial statements
28
For the matters communicated with the audit
committee, we determine those matters that were of
most significance in the audit of the consolidated
financial statements of the current period and are
therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter.
Other legal and regulatory requirements
Responsibilities of the Board of Directors
The board of directors is responsible for the
preparation and the content of the board of directors’
annual report on the consolidated financial statements.
Statutory auditor’s responsibilities
In the context of our engagement and in accordance
with the Belgian standard which is complementary to
the International Standards on Auditing as applicable in
Belgium, our responsibility is to verify, in all material
respects, the board of directors’ annual report on the
consolidated financial statements, and to report on
these matters.
Aspects concerning the board of directors’ annual
report on the consolidated financial statements
Based on specific work performed on the board of
directors’ annual report on the consolidated financial
statements, we are of the opinion that this report is
consistent with the consolidated financial statements
for the same period and has been prepared in
accordance with article 3:32 of the Companies’ and
Associations’ Code.
In the context of our audit of the consolidated financial
statements, we are also responsible for considering, in
particular based on the knowledge gained throughout
the audit, whether the board of directors’ annual report
on the consolidated financial statements contains
material misstatements, that is information incorrectly
stated or misleading. In the context of the procedures
carried out, we did not identify any material
misstatements that we have to report to you.
The non-financial information required by article 3:32
§2 of the Companies’ and Associations’ Code has been
included in the board of directors’ annual report on the
consolidated financial statements. The Company has
prepared this non-financial information based on the
Global Reporting Initiative (“GRI”) Standards. In
accordance with art 3:80 §1, 1st paragraph, 5° of the
Companies’ and Associations’ Code, we do not
comment on whether this non-financial information
has been prepared in accordance with the mentioned
GRI Standards.
Information about the independence
•Our audit firm and our network have not performed
any engagement which is incompatible with the
statutory audit of the consolidated accounts and
our audit firm remained independent of the Group
during the term of our mandate.
•The fees for the additional engagements which are
compatible with the statutory audit referred to in
article 3:65 of the Companies’ and Associations’
Code were correctly stated and disclosed in the
notes to the consolidated financial statements.
European Single Electronic Format (ESEF)
In accordance with the draft standard on the audit of
compliance of the Financial Statements with the
European Single Electronic Format (hereafter “ESEF”),
we have audited as well whether the ESEF-format is in
accordance with the regulatory technical standards as
laid down in the EU Delegated Regulation nr. 2019/815
of 17 December 2018 (hereafter “Delegated
Regulation”).
The board of directors is responsible for the
preparation, in accordance with the ESEF
requirements, of the consolidated financial statements
in the form of an electronic file in ESEF format
(hereafter “digital consolidated financial statements”)
included in the annual financial report.
It is our responsibility to obtain sufficient and
appropriate information to conclude whether the
format and the tagging of the digital consolidated
financial statements comply, in all material respects,
with the ESEF requirements under the Delegated
Regulation.
In our opinion, based on our work performed, the
format of and the tagging of information in the English
version of the digital consolidated financial statements
as per December 31, 2022, included in the annual
financial report of X-Fab Silicon Foundries SE, are, in all
material respects, prepared in compliance with the
ESEF requirements under the Delegated Regulation.
Other aspect
•This report is consistent with our additional report
to the audit committee on the basis of Article 11 of
Regulation (EU) No 537/2014.
Hasselt, March 23, 2023
KPMG Bedrijfsrevisoren - Réviseurs d’Entreprises
Statutory Auditor represented by
Jos Briers
Bedrijfsrevisor / Réviseur d’Entreprises
29
5.4 Consolidated financial statements
Consolidated statement of profit or loss and other comprehensive income
For the year ended December 31
in thousands of U.S. dollars
Note
2022
2021
Revenue
6.1/12
739,469
657,751
Cost of sales
6.2/6.6/12
(563,515)
(507,773)
Gross profit
175,954
149,978
Research and development expenses
6.3/6.6/12
(40,803)
(34,308)
Selling expenses
6.4/6.6/12
(8,179)
(8,017)
General and administrative expenses
6.5/6.6
(37,487)
(32,771)
Rental income and expenses from investment properties
6.7/6.8/12
(298)
1,898
Impairment loss on trade receivables
7.4
(104)
(299)
Other income and other expenses
6.9/6.10/12
(31,748)
711
Operating profit
57,335
77,192
Finance income
6.11/12
36,531
16,115
Finance costs
6.12/12
(56,804)
(20,441)
Net finance income/(costs)
(20,273)
(4,326)
Profit before tax
37,062
72,866
Income tax
6.13
15,429
10,774
Profit for the period
52,491
83,640
Attributable to:
Equity holders of the Company
52,491
83,607
Non-controlling interest
7.9
—
33
Annual Report 2022 | X-FAB consolidated financial statements
30
Consolidated statement of profit and loss and other comprehensive income (continued)
For the year ended December 31
in thousands of U.S. dollars
Note
2022
2021
Profit for the period
52,491
83,640
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit obligation (asset)
7.11
184
842
Items that are or may be transferred to profit or loss as
follows:
Foreign currency translation differences for foreign operations
333
188
Other comprehensive income/(loss) for the period, net of
income tax
517
1,030
Total comprehensive income for the period
53,008
84,670
Total comprehensive income attributable to:
Owners of the Company
53,008
84,637
Non-controlling interest
7.9
—
33
Total comprehensive income for the period
53,008
84,670
Weighted average number of shares outstanding, basic and diluted
6.14
130,631,921
130,631,921
Earnings per share
Basic and diluted (in U.S. dollars)
6.14
0.40
0.64
The accompanying notes are an integral part of these consolidated financial statements.
31
Consolidated statement of financial position
in thousands of U.S. dollars
Note
December 31,
2022
December 31,
2021
ASSETS
Non-current assets
Property, plant, and equipment
7.1
460,126
340,670
Investment properties
7.1
7,675
8,310
Intangible assets
7.2
6,199
4,034
Other assets
7.5
79
28
Deferred tax assets
6.13
67,977
45,645
Total non-current assets
542,056
398,687
Current assets
Inventories
7.3
214,435
181,014
Trade and other receivables
7.4/12
73,116
73,689
Income tax receivables
6.13
257
745
Other assets
7.5
55,768
42,609
Cash and cash equivalents
7.6
369,425
290,187
Total current assets
713,001
588,244
Total assets
1,255,057
986,931
EQUITY AND LIABILITIES
Equity
Share capital
7.7
432,745
432,745
Share premium
7.7
348,709
348,709
Retained earnings
7.7
16,509
(36,154)
Cumulative translation adjustment
7.7
(226)
(559)
Treasury shares
7.7
(770)
(770)
Total equity attributable to equity holders of the Company
796,967
743,971
Non-controlling interests
7.9
—
365
Total equity
796,967
744,336
Non-current liabilities
Loans and borrowings
7.10
63,432
39,916
Other liabilities and provisions
7.11
4,024
5,686
Total non-current liabilities
67,456
45,602
Current liabilities
Trade payables
7.12/12
53,654
41,364
Loans and borrowings
7.10
233,513
87,114
Income tax payable
6.13
8,210
3,184
Provisions
7.13
7,413
4,445
Other liabilities
7.12
87,844
60,886
Total current liabilities
390,634
196,993
Total equity and liabilities
1,255,057
986,931
The accompanying notes are an integral part of these consolidated financial statements.
Annual Report 2022 | X-FAB consolidated financial statements
32
Consolidated statement of changes in Group equity
in thousands of U.S.
dollars
Note
Shares issued and fully
paid
Share capital
Share premium
Retained earnings
Cumulative translation
adjustment
Treasury shares
Total attributable to
owners of the
Company
Non-controlling
interests
Total equity
At December 31, 2020
130,781,669
432,745
348,709
(120,603)
(747)
(770)
659,334
343
659,677
Profit for the period
83,607
83,607
33
83,640
Remeasurement of
defined benefit plans
842
842
842
Currency translation
effect, net of tax
188
188
—
188
Total comprehensive
income
—
—
—
84,449
188
—
84,637
33
84,670
Transactions with
owners of the
Company
Distribution to non-
controlling interests
(GVG)
7.9
(11)
(11)
Total transactions
with owners of the
Company
—
—
—
—
—
—
—
(11)
(11)
At December 31, 2021
130,781,669
432,745
348,709
(36,154)
(559)
(770)
743,971
365
744,336
Profit for the period
52,491
52,491
52,491
Remeasurement of
defined benefit plans
184
184
184
Currency translation
effect
333
333
—
333
Total comprehensive
income
—
—
—
52,675
333
—
53,008
—
53,008
Transactions with
owners of the
Company
Distribution to non-
controlling interests
(GVG)
7.9
(11)
(11)
Acquisition of non-
controlling interests
(GVG)
(12)
(354)
Total transactions
with owners of the
Company
—
—
—
(12)
—
—
(12)
(365)
(377)
At December 31, 2022
130,781,669
432,745
348,709
16,509
(226)
(770)
796,967
—
796,967
The accompanying notes are an integral part of these consolidated financial statements.
33
Consolidated statement of cash flows
For the year ended December 31
in thousands of U.S. dollars
Note
2022
2021
Cash flow from operating activities:
Profit for the period
52,491
83,640
Income tax
6.13
(15,429)
(10,774)
Income before taxes
37,062
72,866
Reconciliation of net income to cash flow arising from
operating activities:
96,296
70,319
Depreciation and amortization, before effect of grants and
subsidies
6.6/7.1/7.2
77,534
76,093
Amortization of investment grants and subsidies
6.6
(3,346)
(3,530)
Interest income and expenses (net)
6.11/6.12
17,407
(176)
Loss/(gain) on the sale of plant, property and equipment (net)
6.9/6.10/
7.1/7.2
(3,889)
(275)
Loss/(gain) on the change in fair value of financial assets
6.11/10
500
—
Other non-cash transactions (net)
8
8,090
(1,793)
Changes in working capital
(32,887)
(31,573)
Decrease/(increase) of trade and other receivables
7.4
(6,661)
(9,769)
Decrease/(increase) of other assets
7.5
(12,759)
(4,034)
Decrease/(increase) of inventories
7.3
(33,422)
(27,302)
(Decrease)/increase of trade payables
7.12/8
(1,873)
5,146
(Decrease)/increase of other liabilities and provisions
7.11/7.12/7.13
21,828
4,386
Income taxes (paid)/received
(480)
(2,101)
Net cash from operating activities
99,991
109,511
Cash flow from investing activities:
Payments for property, plant, equipment, and intangible assets
7.1/7.2
(180,580)
(66,972)
Payments for investments in investment properties
7.1
—
—
Payments for acquisition of non-controlling interest
7.9
(204)
—
Payments for loan investments to related parties
12
(299)
(827)
Proceeds from loan investments related parties
12
284
211
Proceeds from the sale of property, plant, and equipment
7.1
4,017
669
Interest received
6.11/6.12
1,801
1,769
Net cash used in investing activities
(174,981)
(65,150)
Proceeds from loans and borrowings
7.10
184,272
82,585
Repayment of loans and borrowings
7.10
(11,420)
(28,218)
Receipts from sale and leaseback arrangements
7.10/8
7,723
—
Payment of lease liabilities
7.10
(5,662)
(5,094)
Receipt of government grants and subsidies
945
535
Interest paid
6.10/6.11
(17,812)
(1,569)
Dividends to non-controlling interests
7.9
(11)
(12)
Net cash from/used in financing activities
158,035
48,227
Effects of changes in foreign currency exchange rates
on cash balances
(3,807)
(8,269)
Net increase/(decrease) of cash and cash equivalents
83,045
92,589
Cash and cash equivalents at the beginning of the period
290,187
205,867
Cash and cash equivalents at the end of the period
369,425
290,187
The accompanying notes are an integral part of these consolidated financial statements.
Annual Report 2022 | X-FAB consolidated financial statements
34
Notes to the consolidated financial
statements
1 Basic information and description of the X-FAB
Silicon Foundries SE Group’s business
X-FAB Silicon Foundries SE (hereafter referred to as
“X-FAB SE,” “the Company,” or “the parent company”
and, together with its subsidiaries, as “X-FAB SE
Group” or “the Group”) is a European limited company
(Societas Europaea/SE) registered under the number
BE0882.390.885 in Hasselt, Belgium. The parent
company’s registered address is Transportstraat 1,
3980 Tessenderlo, Belgium.
The Group has no associates, joint ventures, joint
operations, or investments in unconsolidated
structured entities (entities designed so that voting or
similar rights are not the dominant factor in deciding
which party controls the entity).
The X-FAB SE Group is one of the world’s leading
pure-play foundry providers specializing in analog/
mixed-signal technologies.
Analog/mixed-signal products are circuits capable of
processing digital as well as analog signals. As a pure-
play foundry, the Group develops its own technologies,
offering its customers a comprehensive range of
product development (design support) and
production services. The X-FAB SE Group
manufactures integrated circuits to customers’
designs, supplying these in the form of silicon wafers.
For this purpose, X-FAB SE offers special technology
modules, cell libraries, and design kits, which allow the
Group’s customers to develop specific circuits with
broad function spectrums and to accelerate their
development processes.
X-FAB SE Group’s customers include companies that
concentrate on the development of integrated circuits
(ICs) and leave their manufacture to others (fabless
companies). The Group’s customers are primarily in the
communication, automotive, consumer, and industrial
product sectors, and are located in Europe, the United
States, and Asia.
2 Group structure
The X-FAB SE Group structure as of December 31, 2022 is illustrated below.
X-FAB Dresden GmbH & Co. KG refers to X-FAB Dresden GmbH & Co. KG and X-FAB Dresden Verwaltungs-GmbH
35
The Group’s primary operations are held by X-FAB
Semiconductor Foundries GmbH (X-FAB GmbH),
X-FAB Dresden GmbH & Co. KG (X-FAB Dresden),
X-FAB Texas Inc., Lubbock, Texas (X-FAB Texas),
X-FAB Sarawak Sdn. Bhd. (X-FAB Sarawak), and
X-FAB France SAS (X-FAB France), each of which
operate wafer factories at their respective locations.
X-FAB MEMS Foundry Itzehoe GmbH (MFI) and
X-FAB MEMS Foundry GmbH (XMF) offer process
technologies for the fabrication of micromechanical
sensors for the detection of pressure, acceleration,
rotation, and IR-radiation including integrated solutions
that combine MEMS and CMOS. The remaining entities
provide research and development, marketing and
sales, and administration services to other Group
entities or serve administrative purposes.
3 Basis of preparation
3.1 Statement of compliance
The consolidated financial statements have been
prepared in accordance with International Financial
Reporting Standards (IFRS) as endorsed by the
European Union. All IFRS and IAS standards and
associated interpretations were adopted to the extent
that they had been endorsed by the European Union
by the date of issue of these financial statements.
The consolidated financial statements of X-FAB SE
Group for the year ended December 31, 2022, were
authorized for issue in accordance with a resolution of
the directors on March 23, 2023.
3.2 Basis of measurement
The consolidated financial statements have been
prepared on a historical cost basis, except for
derivative financial assets and liabilities and certain
non-derivative financial investments which are
measured at fair value. The net defined benefit liability
is measured at the present value of the defined
obligation less the fair value of plan assets.
3.3 Functional and presentation currency
The consolidated financial statements are presented in
U.S. dollars (USD), which is the functional and
presentation currency of the parent company and the
Group’s primary operating companies. Amounts are
rounded to the nearest thousand except when
otherwise indicated. Rounding differences may occur.
3.4 Use of judgments, assumptions, and estimation
uncertainties
In preparing these consolidated financial statements
management has made judgments, assumptions, and
estimates that affect the application of the Group’s
accounting policies and the reported amounts of
assets, liabilities, income, and expenses. Actual
amounts may differ from these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are
revised and in any future periods affected.
Judgments
Determination of functional currency
The functional currency of the holding company and
most of its subsidiaries has been assessed as the U.S.
dollar (USD) due to the fact that the currency that
mainly influences sales prices for goods and services is
the USD. Only two subsidiaries have different
functional currencies (the euro and the Russian ruble).
These subsidiaries are not significant to the Group’s
consolidated financial statements.
With respect to the holding company the assessment is
based on the fact that the holding acts as an
investment holding entity (in operational subsidiaries
with USD as their functional currency) and its sole
activity consists of the re-allocation of Group costs
which are incurred and subsequently recharged in USD.
Hence the USD is deemed the most appropriate
functional currency of the holding for the preparation
of the consolidated financial statements.
Revenue recognition (note 4.3)
Judgment was applied in determining whether revenue
from the sale of process control wafers should be
recognized over time or at a point in time. Based on
management’s assessment of its contracts with
customers, the Group has determined that only a
limited number of contracts provide for an enforceable
right to payment for performance completed in the
case that a customer would cancel a contract for
reasons other than any failure to perform as promised.
As a result, the potential recognition of contracts over
time has been considered to be not material.
Recognition of right-of-use assets and lease
liabilities (notes 4.17 and 11)
The Group recognizes right-of-use assets and lease
liabilities for certain assets held under leasing
arrangements. Some of the Group’s lease contracts
include renewal or termination options. In order to
determine the lease term for these contracts the
Group took into account all relevant facts and
circumstances in order to assess whether it is
reasonably certain that these options will be exercised.
This assessment has an impact on the term of the
lease, which has a significant effect on the amount of
the lease liabilities and the measurement of the right-
of-use asset recognized. Should the Group make
changes to its assessment of whether the renewal or
termination options will be exercised, it may be
necessary to increase or decrease the right-of-use
assets and lease liabilities recognized.
Assumptions and estimation uncertainties
Information about assumptions and estimation
uncertainties that have a significant risk of resulting in a
material adjustment in the next financial year is
included in the following notes:
Annual Report 2022 | X-FAB consolidated financial statements
36
Recognition of deferred tax assets (note 6.13)
Deferred tax assets are recorded where it is
considered probable that tax savings will be made in
future periods from the use of losses carried forward
and from the reversal of taxable timing differences
arising on the difference between the accounting and
tax values of the Group’s assets. Taxable profits and
the reversal of timing differences in the next financial
year may differ from the amounts assumed, and
assumptions made in the next financial year about
future taxable profits and reversals of subsequent
years may change. Such changes could result in a
material adjustment.
Measurement of expected credit losses (ECLs) on
trade receivables (note 7.4)
Allowances are made to reflect estimates of the
amount of ECLs on any receivables. The actual amount
of credit losses for receivables in the year ending
December 31, 2023, may differ from the amounts
recorded as impairments in the year ended
December 31, 2022, which may result in a material
adjustment.
Measurement of fair values
A number of the Group’s accounting policies and
disclosures require the measurement of fair values,
both for financial and non-financial assets and liabilities.
If third-party information is used to measure fair
values, the evidence obtained from third parties is
assessed to support the conclusion that such
valuations meet the requirements of IFRS 13, including
the level in the fair value hierarchy in which such
valuations should be classified.
When measuring the fair value of an asset or a liability,
the Group uses market observable data as far as
possible.
Fair values are classified into different levels in a fair
value hierarchy based on the inputs used in the
valuation techniques as follows:
Level 1:quoted (unadjusted) prices in active markets
for identical assets or liabilities.
Level 2:other techniques for which all inputs that have
a significant effect on the recorded fair value
are observable, either directly or indirectly.
Level 3:techniques that use inputs which have a
significant effect on the recorded fair value
that are not based on observable market data.
If the inputs used to measure the fair value of an asset
or a liability might be categorized in different levels of
the fair value hierarchy, then the fair value
measurement is categorized in its entirety in the same
level of the fair value hierarchy as the lowest level input
that is significant to the entire measurement.
The Group measures transfers between levels of the
fair value hierarchy at the end of the reporting period
during which the change has occurred.
Further information about the assumptions made in
measuring fair values is included in the following notes:
•7.1 Property, plant, equipment, and investment
properties
•7.4 Trade and other receivables
•7.10 Loans and borrowings
•10 Financial instruments – fair values and risk
management
4 Summary of accounting policies
4.1 Basis of consolidation
Entities included in the consolidation
The consolidated financial statements include the
financial statements of the parent company and its
subsidiaries, which are entities directly or indirectly
controlled by the parent company. The Group controls
an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the
ability to affect those returns through its power over
the entity. Control is generally obtained by ownership
of a majority of shares.
The financial statements of subsidiaries are included in
the consolidated financial statements from the date on
which control commences until the date on which
control ceases.
The financial statements of the subsidiaries are
prepared for the same reporting year as the parent
company, using consistent accounting policies.
All intra-group balances, transactions, income, and
expenses, as well as profits and losses resulting from
intra-group transactions, are fully eliminated in these
consolidated financial statements.
Non-controlling interests
Non-controlling interests represent the portion of
profit or loss, component of other comprehensive
income and net assets of a subsidiary attributable to
equity interests that are not owned, directly or
indirectly, by the parent company. Non-controlling
interests’ share of income and share of equity are
presented separately in the income statement and
within equity in the consolidated statement of financial
position respectively, separately from parent
shareholder’s equity.
Non-controlling interests are measured at the date of
acquisition at their proportionate share of the acquired
company’s identifiable net assets.
37
4.2 Foreign currency translation
Transactions in foreign currencies are initially recorded
at the functional currency rate ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at the
functional currency rate of exchange ruling at the
statement of financial position date. All differences are
taken to profit or loss. Non-monetary items that are
measured in terms of historical cost in a foreign
currency are translated using the exchange rate as at
the dates of the initial transactions. If the functional
currency of a consolidated entity differs from the
Group’s presentation currency, assets and liabilities of
that entity are translated into the presentation
currency at the closing rate at the statement of
financial position date, whereas equity is translated
using the historic rates, and the income statement is
translated at the average rate of the reporting period.
All resulting differences are recognized in the
cumulative translation adjustment in equity.
4.3 Revenue from contracts with customers
Sales revenue is measured based on the consideration
specified in a contract with a customer. Sales revenues
are recognized net of discounts, customer bonuses,
and rebates granted.
There is no significant uncertainty concerning the
nature, amount, or timing of the revenue or the cash
flows of the revenues reported. The Group recognizes
revenue when it transfers control over a good or
service to a customer.
Sale of process control wafers (PCM wafers)
PCM wafers are goods that are generally customer
specific, i.e. when manufacturing goods for a customer,
X-FAB is creating an asset for the customer that has
no alternative use to X-FAB. However, for the majority
of contracts with its most important customers, X-FAB
has determined that it does not have an enforceable
right to obtain payment for work completed should a
customer cancel an incomplete contract for reasons
other than any failure by X-FAB to perform as
promised. Accordingly, revenue from the sale of
process control wafers (PCM wafers) is recognized
when shipment has been made. At this date, control
over the goods has passed to the customer. Invoices
for the sale are generated at that point in time. Invoices
are usually payable within 30 days. No discounts of the
invoiced amounts are offered to customers in
exchange for prompt payment of invoices. Sales prices
with customers do not include a significant financing
component.
Sales of non-recurring engineering (NRE) services
and technology services
When providing non-recurring engineering (NRE)
services and technology services X-FAB creates an
asset for a customer that has no alternative use to
X‑FAB as the prototype wafers created are generally
customer specific. Invoices are issued according to
contractual terms – based on milestones – and are
usually payable within 30 days. X-FAB has an
enforceable right to payment for the performance of
work completed up to the agreed milestones. Revenue
is therefore recognized over time, and X-FAB applies a
practical expedient for the measurement of progress.
Invoicing based on milestones is a reasonable
approximation of the progress made to completing the
performance obligation. No discounts of the invoiced
amounts are offered to customers in exchange for
prompt payment of invoices. Sales prices with
customers do not include a significant financing
component.
Rental and other income
Revenue in respect of rental and other income is
recognized over time when the relevant service is
provided (see 4.6 below).
Warranty obligations
The Group typically provides warranties for defects
that existed at the time of sale, as required by the
terms and conditions of sale. These are assurance-
type warranties which are accounted for as warranty
provisions based on past experience. No service-type
warranties are sold either separately or bundled
together with the sale of the Group’s products.
Contract costs and contract fulfillment costs
Costs of obtaining contracts requiring capitalization
have been incurred by the Group; however, the
deferral of such costs is not material for the purposes
of these consolidated financial statements.
No costs of fulfilling contracts requiring capitalization
have been incurred which are not recorded as assets in
accordance with IAS 2 Inventories, IAS 16 Property,
Plant and Equipment, or IAS 38 Intangible Assets.
4.4 Research and development expenses
Research and development expenses comprise staff
expenses, depreciation, and other directly attributable
expenses and are allocated process based, i.e. relate to
research and development activities that are not
related to the improvement of the existing production
technologies. Costs incurred in connection with
improving existing production technologies used in
operational production lines are allocated to cost of
sales.
Research and development costs are expensed as
incurred. X-FAB SE Group considers that development
work performed does not qualify for capitalization
because the amount of future benefits to be derived
from use of work performed is characterized by a high
level of uncertainty until the projects are completed.
Government grants are awarded to the Group for its
research and development activities in the form of
cash tax payments or tax credits. IAS 20 Government
Grants is applied to all grants, including the research
and development grants received by X-FAB France,
which are paid out using the French corporation tax
system. The grants are recognized as income and as a
non-current or current asset, as appropriate, when
Annual Report 2022 | X-FAB consolidated financial statements
38
there is reasonable assurance that the entity will
comply with the relevant conditions set out in the
terms of the grant arrangement and that the grant will
be received. These income-related grants are
recognized in profit or loss on a systematic basis as the
entity recognizes as expenses the costs that the grants
are intended to compensate.
4.5 Finance income and finance costs
Interest income or expense is recognized using the
effective interest method. Dividend income is
recognized in profit or loss on the date on which the
Group’s right to receive payment is established.
4.6 Rental income from investment properties
Rental income from operating leases on investment
property is accounted for on a straight-line basis over
the lease term. Lease incentives granted are
recognized as an integral part of the total rental
income and recognized over the term of the lease.
4.7 Employee benefits
Employee benefits consist of short-term employee
benefits, payments into defined contribution pension
schemes and a long-service retirement lump-sum
payment scheme at the Group’s subsidiary X-FAB
France. The Group has no share-based payment
arrangements.
Short-term employee benefits are expensed as the
related service is provided. A liability is recognized for
the amount expected to be paid if the Group has a
present legal or constructive obligation to pay this
amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Obligations for contributions to defined contribution
plans are expensed as the related service is provided.
Prepaid contributions are recognized as an asset to the
extent that a cash refund or a reduction in future
payments is available.
The Group’s net obligation in respect of the long-
service retirement lump-sum payment scheme is
calculated by estimating the amount of future benefit
that employees have earned in the current and prior
periods, discounting that amount, and deducting the
fair value of any plan assets. The calculation of the
obligation is performed annually by an independent
third-party expert actuary using the projected unit
credit method. When the calculation results in a
potential asset for the Group, the recognized asset is
limited to the present value of economic benefits
available in the form of any future refunds from the
plan or reductions in future contributions to the plan.
To calculate the present value of economic benefits,
consideration is given to any applicable minimum
funding requirements. Remeasurements of the net
defined benefit liability, which comprise actuarial gains
and losses, the return on plan assets (excluding
interest), and the effect of the asset ceiling (if any,
excluding interest), are recognized immediately in
other comprehensive income. The Group determines
the net interest expense (income) on the net defined
benefit liability (asset) for the period by applying the
discount rate used to measure the defined benefit
obligation at the beginning of the annual period to the
then-net defined benefit liability (asset), taking into
account any changes in the net defined benefit liability
(asset) during the period as a result of contributions
and benefit payments. Net interest expense and other
expenses related to defined benefit plans are
recognized in profit or loss. When the benefits of a plan
are changed or when a plan is curtailed, the resulting
change in benefit that relates to past service or the
gain or loss on curtailment is recognized immediately in
profit or loss. The Group recognizes gains and losses
on the settlement of a defined benefit plan when the
settlement occurs.
Termination benefits are recorded as an expense at
the earlier of when the Group can no longer withdraw
the offer of those benefits and when the Group
recognizes costs of a restructuring. The benefits are
discounted if it is not expected that they will be settled
wholly within 12 months of the reporting date.
4.8 Property, plant, equipment, and investment
properties
Property, plant, and equipment are measured at
purchase cost less accumulated depreciation and
accumulated impairment losses. Purchase cost
includes expenditure that is directly attributable to the
acquisition of the asset. These accounting policies
have also been applied to investment properties under
the cost model in accordance with IAS 40.
Depreciation is provided using the straight-line
method for property, plant, factory, and office
equipment and for investment properties.
Depreciation is calculated to write off the cost of items
of property, plant, and equipment less their estimated
residual values using the straight-line method over
their estimated useful lives. If significant parts of an
item of property, plant, and equipment have different
useful lives, then they are accounted for as separate
items (major components) of property, plant, and
equipment.
The following useful lives are used as a basis for
calculating depreciation:
•Buildings, including investment properties: over
40–50 years
•Factory and office equipment: straight-line over 3–
10 years
Borrowing costs were not capitalized because no
assets qualifying for the capitalization of borrowing
costs were constructed or acquired in the period.
Costs incurred which extend the useful life of assets, or
which increase performance or capacity of assets, are
capitalized where appropriate. Maintenance and repair
costs are expensed as incurred.
39
Assets are recorded as disposals when they are sold or
scrapped. The resulting gain or loss is recorded in
income within “other income” or “other expenses” as
appropriate.
4.9 Intangible assets
Purchased intangible assets are capitalized at purchase
cost, including, where applicable, own work capitalized
in preparing the intangible assets for use, and
depreciated on a straight-line basis over their
expected useful lives. The useful life applied is five
years.
Internally generated intangible assets were not
capitalized because the criteria for capitalization were
not met (see note 4.4).
The Group has no intangible assets with indefinite
useful lives.
4.10 Impairment
The carrying amounts of the Group’s non- financial
assets other than inventories and deferred tax assets
(for which separate reviews are performed) are
reviewed at each reporting date to determine whether
there is any indication of impairment. If any such
indication exists then the asset’s recoverable amount is
estimated.
The recoverable amount of an asset or cash-
generating unit is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their
present value using a pre-tax discount rate that
reflects current market assessments of the time value
of money and the risks specific to the asset. For the
purpose of impairment testing, assets are grouped
together into the smallest group of assets that
generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets
or groups of assets (the “cash-generating unit”).
An impairment loss is recognized if the carrying
amount of an asset or its cash-generating unit exceeds
its estimated recoverable amount. Impairment losses
are recognized in profit or loss. Impairment losses
recognized in respect of cash-generating units are
allocated first to reduce the carrying amount of any
goodwill allocated to the units and then to reduce the
carrying amounts of the other assets in the unit (group
of units) on a pro rata basis.
An impairment loss is reversed if there has been a
change in the estimates used to determine the
recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have
been determined, net of depreciation or amortization,
if no impairment loss had been recognized.
4.11 Financial instruments
Recognition and initial measurement
Trade receivables are initially recognized when they are
originated, i.e. when or as the goods and services are
provided and the revenue for those goods and
services is recognized. Regular way purchases and
sales of financial assets were accounted for at the
settlement date. All other financial assets and financial
liabilities are initially recognized when the Group
becomes a party to the contractual provisions of the
financial instrument. The Group’s trade receivables do
not include a significant financing component and the
amounts recognized for trade receivables are initially
recognized at the transaction price. All other financial
assets and financial liabilities are initially recognized at
fair value plus, for items not recognized at fair value
through profit or loss (FVTPL), transaction costs that
are directly attributable to its acquisition or issue.
Classification and subsequent measurement
On initial recognition, a financial asset is classified as
measured at amortized cost; FVOCI – debt
investment; FVOCI – equity investment; or FVTPL.
(a) Financial assets at amortized cost
A financial asset is classified as measured at amortized
cost if it meets both of the following conditions and is
not designated as at FVTPL:
•it is held within a business model whose objective is
to hold assets to collect contractual cash flows; and
•its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
(b) Debt investments at fair value through other
comprehensive income (FVOCI)
A debt investment is classified as measured at fair
value through other comprehensive income if it meets
both of the following conditions and is not designated
as at FVTPL:
•it is held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling financial assets; and
•its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
(c) Equity investments at fair value through other
comprehensive income (FVOCI)
An equity investment is classified as measured at fair
value through other comprehensive income if it is not
held for trading and the Group irrevocably elects to
present subsequent changes in the investment’s fair
value in OCI. This election is made on an investment-
by-investment basis.
(d) Financial assets at fair value through profit or
loss (FVTPL)
All financial assets not classified as measured at
amortized cost or FVOCI as described above are
measured at FVTPL. This includes all derivative
financial assets, equity investments held for trading,
and equity instruments not held for trading, but for
40
which the Group did not elect to present fair value
changes in other comprehensive income.
On initial recognition, the Group may irrevocably
designate a financial asset that otherwise meets the
requirements to be measured at amortized cost or at
FVOCI as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that
would otherwise arise. No such designations have been
made by the Group.
Financial assets – business model assessment
The Group makes an assessment of the objective of
the business model in which a financial asset is held at a
portfolio level because this best reflects the way the
business is managed and information is provided to
management. The information considered includes:
•the stated policies and objectives for the portfolio
and the operation of those policies in practice.
These include whether management’s strategy
focuses on earning contractual interest income,
maintaining a particular interest rate profile,
matching the duration of the financial assets to the
duration of any related liabilities or expected cash
outflows, or realizing cash flows through the sale of
the assets;
•how the performance of the portfolio is evaluated
and reported to the Group’s management;
•the risks that affect the performance of the
business model (and the financial assets held within
that business model) and how those risks are
managed;
•how managers of the business are compensated –
e.g. whether compensation is based on the fair
value of the assets managed or the contractual
cash flows collected; and
•the frequency, volume, and timing of sales of
financial assets in prior periods, the reasons for
such sales, and the expectations about future sales
activity.
Transfers of financial assets to third parties in
transactions that do not qualify for derecognition are
not considered sales for this purpose, consistent with
the Group’s continuing recognition of the assets.
Financial assets that are held for trading or are
managed and whose performance is evaluated on a
fair value basis are measured at FVTPL.
Financial assets – Assessment of whether
contractual cash flows are solely payments of
principal and interest
For the purposes of this assessment, “principal” is
defined as the fair value of the financial asset on initial
recognition. “Interest” is defined as consideration for
the time value of money and for the credit risk
associated with the principal amount outstanding
during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and
administrative costs), as well as a profit margin. In
assessing whether the contractual cash flows are solely
payments of principal and interest, the Group
considers the contractual terms of the instrument. This
includes assessing whether the financial asset contains
a contractual term that could change the timing or
amount of contractual cash flows such that it would not
meet this condition. In making this assessment, the
Group considers:
•contingent events that would change the amount
or timing of cash flows;
•terms that may adjust the contractual coupon rate,
including variable-rate features;
•prepayment and extension features; and
•terms that limit the Group’s claim to cash flows
from specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely
payments of principal and interest criterion if the
prepayment amount substantially represents unpaid
amounts of principal and interest on the principal
amount outstanding, which may include reasonable
additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at a
discount or premium to its contractual par value, a
feature that permits or requires prepayment at an
amount that substantially represents the contractual
par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional
compensation for early termination) is treated as
consistent with this criterion if the fair value of the
prepayment feature is insignificant at initial recognition.
Financial assets – Subsequent measurement and
gains and losses
Financial assets at FVTPL
These assets are subsequently measured at fair value.
Net gains and losses, including any interest or dividend
income, are recognized in profit or loss. The Group
does not apply hedge accounting and accordingly
does not apply alternative allowed accounting
treatment permitted for derivatives designated as
hedging instruments.
Financial assets at amortized cost
These assets are subsequently measured at amortized
cost using the effective interest method. The
amortized cost is reduced by impairment losses.
Interest income, foreign exchange gains and losses,
and impairment are recognized in profit or loss. Any
gain or loss on derecognition is recognized in profit or
loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value.
Interest income calculated using the effective interest
method, foreign exchange gains and losses, and
impairment are recognized in profit or loss. Other net
gains and losses are recognized in OCI. On
derecognition, gains and losses accumulated in OCI are
reclassified to profit or loss.
41
Equity investments at FVOCI
These assets are subsequently measured at fair value.
Dividends are recognized as income in profit or loss
unless the dividend clearly represents a recovery of
part of the cost of the investment. Other net gains and
losses are recognized in OCI and are never reclassified
to profit or loss.
Financial liabilities
Financial liabilities are classified as measured at
amortized cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held for
trading, it is a derivative, or it is designated as such on
initial recognition, whereby no liabilities as at FVTPL
have been made by the Group. Financial liabilities at
FVTPL are measured at fair value, and net gains and
losses, including any interest expense, are recognized
in profit or loss. Other financial liabilities are
subsequently measured at amortized cost using the
effective interest method. Interest expense and
foreign exchange gains and losses are recognized in
profit or loss. Any gain or loss on derecognition is also
recognized in profit or loss.
Derecognition
Financial assets
The Group derecognizes a financial asset when the
contractual rights to the cash flows from the financial
asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which
substantially all of the risks and rewards of ownership
of the financial asset are transferred or in which the
Group neither transfers nor retains substantially all of
the risks and rewards of ownership and it does not
retain control of the financial asset.
The Group enters into transactions whereby it
transfers assets recognized in its statement of financial
position, but retains either all or substantially all of the
risks and rewards of the transferred assets. In these
cases, the transferred assets are not derecognized.
Financial liabilities
The Group derecognizes a financial liability when its
contractual obligations are discharged or canceled, or
expire. The Group also derecognizes a financial liability
when its terms are modified and the cash flows of the
modified liability are substantially different, in which
case a new financial liability based on the modified
terms is recognized at fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the
consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognized in
profit or loss.
Offsetting
No financial assets or liabilities are presented on a net
basis in these consolidated financial statements.
Impairment
The Group recognizes loss allowances for the
expected credit losses (ECLs) that it expects to incur
over the lifetime of financial assets which it measures
at amortized cost.
Loss allowances for trade receivables are always
measured at an amount equal to lifetime ECLs. When
determining whether the credit risk of a financial asset
has increased significantly since initial recognition and
when estimating ECLs, the Group considers
reasonable and supportable information that is
relevant and available without undue cost or effort.
This includes both quantitative and qualitative
information and analysis, based on the Group’s
historical experience and informed credit assessment
and including forward-looking information.
The maximum period considered when estimating
ECLs is the maximum contractual period over which
the Group is exposed to credit risk.
Measurement of ECLs for non-credit-impaired
receivables is assessed collectively based on a
probability-weighted estimate of credit losses
dependent on the number of days the balances are
overdue. Expected credit losses are measured based
on past experience of the recovery of similar portfolios
of receivables as the Group considers this to be a
reasonable approximation of the present value of the
shortfalls that can be expected in future. ECLs are
discounted at the effective interest rate of the
financial asset if the discounting effect is determined
to be material. Based on the contractual agreements,
receivables are in default when the balances are unpaid
by the due date. Dunning collection procedures
commence when a receivable is five days overdue.
Receivables are classified as credit impaired from the
date on which the receivable is 90 days overdue,
despite dunning procedures having being performed,
or from the date any other specific indications are
received that a significant deterioration in credit has
occurred. Credit-impaired receivables are assessed on
a case-by-case basis and assessments of collectability
are based on the information available concerning the
outstanding balance, including discussions with the
customer, assessments of the reliability of the
information provided, available counterclaims or
security, an understanding of the economic climate in
which the customer operates, and experience with that
customer, as well as experience of similar collection
procedures.
The relevant amounts are written off when the Group
considers that there is no realistic prospect of recovery
of the receivable and when no further enforcement
activity is taken. When a customer is in liquidation the
outstanding amounts are listed and monitored in an
ongoing liquidation register until the liquidation
process is complete.
No loss allowances are made for cash and cash
equivalents as it has been determined that, because of
the good standing of the Group’s banking partners, the
credit risk at the reporting date is so low that the ECLs
are insignificant both at the date of their initial
recognition and since initial recognition.
Annual Report 2022 | X-FAB consolidated financial statements
42
Fair values of cash and cash equivalents and current
receivables and liabilities
The fair values of cash and cash equivalents, current
receivables, and current liabilities approximate their
book values due to their short-term nature.
4.12 Derivative financial instruments
The Group holds derivative financial instruments to
hedge certain foreign currency and interest risk
exposures. Embedded derivatives are separated from
the host contract and accounted for separately if the
host contract is not a financial asset and certain criteria
are met. Derivative financial instruments are not
designated as hedging instruments for hedge
accounting purposes and are accordingly classified as
fair value through profit or loss.
Gains and losses from changes in the fair values of the
derivative financial instruments are reported in the
income statement within finance income and finance
expenses. The fair values of the derivative financial
instruments are presented in the statement of financial
position as other current assets and/or other current
liabilities, as appropriate, unless their maturity exceeds
12 months in which case they will be presented as non-
current.
4.13 Inventories
Inventories of raw materials, consumables, and supplies
are measured at the lower of cost and net realizable
value. The cost of inventories comprises all costs of
purchase, cost of conversion, and other costs incurred
in bringing the inventories to their present location and
condition, determined by using the weighted average
acquisition cost method. Allowances are recognized if
the carrying amount exceeds the expected sales price
less the estimated cost to complete the inventories
and the cost of marketing, sales, and distribution
activities. Allowances are made in full for inventories
with no realizable value.
4.14 Cash and cash equivalents
Cash and cash equivalents represent cash in hand,
checks, and available balances on bank current
accounts with an original maturity of four weeks or less.
The use of cash and cash equivalents reported are in
general not subject to restrictions with the exception
of term deposits reported as cash in note 7.6.
4.15 Equity
Share capital
The nominal paid-in contribution amount on each
share is recorded in share capital.
Share premium
Incremental costs directly attributable to the issue of
share capital are recognized as a deduction from the
share premium account, less any related tax effects.
Treasury shares
The Group reports treasury shares as deductions from
the Group equity at the cost of purchase.
Equity instruments and financial liabilities
Equity instruments and financial liabilities (including
share capital, redeemable preference shares, and other
loans and borrowings) are classified according to the
substance of the contractual arrangements entered
into. An equity instrument is any contract that
evidences a residual interest in the assets of the Group
after deducting all of its liabilities. Dividends and
distributions relating to equity instruments are debited
directly to reserves. Equity instruments issued are
recorded at the proceeds received, net of direct issue
costs. A financial liability exists where there is a
contractual obligation to deliver cash or another
financial asset to another entity, or to exchange
financial assets or financial liabilities under potentially
unfavorable conditions. In addition, contracts that
result in the entity delivering a variable number of its
own equity instruments are financial liabilities. Shares
containing such obligations are classified as financial
liabilities. Finance costs and gains or losses relating to
financial liabilities are included in the income statement.
The carrying amount of the liability is increased by the
finance cost and reduced by payments made in
respect of that liability.
4.16 Provisions
Provisions are recognized when present obligations
(legal or constructive) exist which result from past
events and which are expected to result in an outflow
of resources of which the timing or amount is
uncertain. The provisions are measured at the
discounted amount of the expected future cash flows
arising under the respective obligation at a pre-tax rate
that reflects current market assessments of the time
value of money and the risks specific to the liability.
The unwinding of the discount is recognized as finance
cost. Where the Group expects some or all of a
provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognized
as a separate asset but only when the reimbursement
is virtually certain. The expense relating to any
provision is presented in profit or loss. If the effect of
the time value of money is material, provisions are
discounted using a pre-tax rate that reflects current
market assessments of the time value of money and of
the risk specific to the liability.
A provision for restructuring is recognized when the
Group has approved a detailed and formal
restructuring plan, and the restructuring either has
commenced or has been announced publicly. A
provision for onerous contracts is recognized for each
specific contract in which the unavoidable costs of
meeting the obligations under the contract exceed the
economic benefits expected to be received under the
contract.
43
4.17 Leases
The Group assesses whether a contract is, or contains,
a lease arrangement. A contract is, or contains, a lease
if a contract conveys a right to control the use of an
identified asset for a period of time in exchange for
consideration.
The Group as lessee
The assets held under the Group’s leasing
arrangements are primarily commercial properties,
production equipment, and infrastructure equipment.
The Group recognizes right-of-use assets and lease
liabilities for most assets, i.e. these are presented on-
balance sheet. However, it has elected to not to
recognize right-of-use assets and lease liabilities for
leases of low-value assets. The Group recognizes the
lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
The Group has not applied a simplification election
available under IFRS 16 not to separate non-lease
components of a lease. At inception or on
reassessment of a contract that contains a lease
component the Group allocates the consideration in
the contract to each lease and non-lease component
of the respective contract on the basis of their relative
stand-alone prices.
The Group presents right-of-use assets within
“property, plant, and equipment” in the statement of
financial position, on the same line as it presents
underlying assets of the same nature that are owned
by the Group. The Group does not hold any properties
under leases which are classified as investment
properties.
The Group presents lease liabilities within “loans and
borrowings”, classified between current and non-
current liabilities as appropriate.
The Group recognizes a right-of-use asset and a lease
liability at the lease commencement date. The right-
of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the
underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use asset is subsequently depreciated
using the straight-line method from the
commencement date to the end of the lease term,
unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the
cost of the right-of-use asset reflects that the Group
will exercise a purchase option. In that case the right-
of-use asset will be depreciated over the useful life of
the underlying asset, which is determined on the same
basis as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate.
Generally, the Group uses an estimate of its
incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate
by obtaining interest rates from various external
financing sources and makes certain adjustments to
reflect the terms of the lease and type of the asset
leased.
Lease payments included in the measurement of the
lease liability comprise the following:
•fixed payments, including in-substance fixed
payments;
•variable lease payments that depend on an index or
a rate, initially measured using the index or rate as
at the commencement date;
•amounts expected to be payable under a residual
value guarantee; and
•the exercise price under a purchase option that the
Group is reasonably certain to exercise, lease
payments in an optional renewal period if the
Group is reasonably certain to exercise an
extension option, and penalties for early
termination of a lease unless the Group is
reasonably certain not to terminate early.
Some of the Group’s lease contracts include renewal
or termination options. In order to determine the lease
term for these contracts the Group takes into account
all relevant facts and circumstances in order to assess
whether it is reasonably certain that these options will
be exercised. This assessment has an impact on the
term of the lease, which has a significant effect on the
amount of the lease liabilities and the measurement of
the right-of-use asset recognized.
Generally, the Group uses an estimate of its
incremental borrowing rate as the discount rate. The
lease liability is remeasured when there is a change in
future lease payments arising from a change in an
index or rate, if there is a change in the Group’s
estimate of the amount expected to be payable under
a residual value guarantee, if the Group changes its
assessment of whether it will exercise a purchase,
extension or termination option, or if there is a revised
in-substance fixed lease payment. When the lease
liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been
reduced to zero.
Short-term leases and leases of low-value assets
The Group has elected not to recognize right of-use
assets and lease liabilities for leases of low-value assets
and short-term leases, including IT equipment. The
Group recognizes the lease payments associated with
Annual Report 2022 | X-FAB consolidated financial statements
44
these leases as an expense on a straight-line basis over
the lease term.
Sale and leaseback transactions
When the Group undertakes a sale and leaseback
transaction with a buyer-lessor, it determines whether
the transfer qualifies as a sale. This determination is
based on the requirements for satisfying a
performance obligation in IFRS 15 Revenue from
Contracts with Customers. If the transfer qualifies as a
sale and the transaction is on market terms the Group
splits the previous carrying amount of the underlying
asset into (a) a right-of-use asset arising from the
leaseback and (b) the rights in the underlying asset
retained by the buyer-lessor at the end of the
leaseback. The Group recognizes a portion of the total
gain or loss on the sale. The amount recognized is
calculated by splitting the total gain or loss into (a) an
unrecognized amount relating to the rights retained by
the seller-lessee and (b) an amount recognized
amount relating to the buyer-lessor’s rights in the
underlying asset at the end of the leaseback. The
leaseback itself is then accounted for under the lessee
accounting model. Adjustments are required if
consideration for the sale is not at fair value and/or
payments for the lease are not at market rates. These
adjustments result in recognition of a prepayment to
reflect below-market terms and/or additional financing
provided by the buyer-lessor to the seller-lessee to
reflect above-market terms.
The Group as lessor
The Group is lessor at several locations where it leases
commercial property which is owned by the Group but
not used for its own commercial business purposes.
The Group has classified these leases as operating
leases, because they do not transfer substantially all of
the risks and rewards incidental to the ownership of the
assets.
At inception or on modification of a contract that
contains a lease component, the Group allocates the
consideration in the contract to each lease component
on the basis of their relative stand-alone prices.
When the Group acts as a lessor, it examines each
lease at lease inception to determine whether is a
finance lease or an operating lease. This consists of
making an overall assessment of whether the lease
transfers substantially all of the risks and rewards
incidental to ownership of the underlying asset. If this is
the case, then the lease is a finance lease; if not, then it
is an operating lease. As part of this assessment, the
Group considers certain indicators such as whether the
lease is for the major part of the economic life of the
asset.
When the Group is an intermediate lessor, it accounts
for its interests in the head lease and the sublease
separately. It assesses the lease classification of a
sublease with reference to the right-of-use asset
arising from the head lease, not with reference to the
underlying asset. If a head lease is a short-term lease to
which the Group applies the exemption described
above, then it classifies the sub-lease as an operating
lease. If an arrangement contains lease and non-lease
components, then the Group applies IFRS 15 to
allocate the consideration in the contract.
All leases entered into by the Group as lessor to date
have been classified as operating leases and relate to
investment properties rented to third parties. The
Group recognizes lease payments received under
operating leases as income on a straight-line basis over
the lease term as part of “Income from investment
property rentals.”
4.18 Subsidies
The Group receives government assistance in the form
of government investment grants and investment
subsidies which are dependent on the acquisition of
certain assets qualifying under the respective grant
awards. Grants and subsidies related to assets are
recognized when there is reasonable assurance that
the entity will comply with the relevant conditions of
the grant, and that grant will be received. They are
recognized in profit or loss on a systematic basis as the
entity recognizes as expenses the costs that the grants
are intended to compensate. The investment grants
and subsidies received reduce the purchase cost for
the relevant subsidized assets recorded under
property, plant, and equipment.
The receipt of government assistance is governed by
terms set out in law and by specific terms and
conditions attached to the applicable grants and
subsidies.
4.19 Income taxes
The income tax charge includes current and deferred
taxation. Deferred income taxes reflect the tax effects
of temporary differences between the carrying
amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax
purposes and the deferred benefits expected from
unused tax losses, unused tax credits, and other credits
carried forward, whereby amounts are only recognized
when their realization is considered by management to
probable. Deferred tax assets and liabilities are
measured using the tax rates expected to apply to
taxable income in the years in which these temporary
differences are expected to be recovered or settled,
based on tax rates enacted or substantially enacted at
the statement of financial position date.
The measurement of deferred tax liabilities and
deferred tax assets reflects the tax consequences that
would follow from the manner in which the enterprise
expects, at the statement of financial position date, to
recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets are not discounted and are
classified as non-current assets in the statement of
financial position. Current and deferred tax assets and
liabilities are offset only if certain criteria are met. Such
45
criteria mean the entity has a legally enforceable right
to set off the recognized amounts and it intends either
to settle on a net basis or to realize the asset and settle
the liability simultaneously. Deferred tax assets are
recognized when it is probable that sufficient taxable
profits will be available against which the deferred tax
assets can be utilized.
At each statement of financial position date, the Group
reassesses unrecognized deferred tax assets and the
carrying amount of deferred tax assets. The Group
recognizes a previously unrecognized deferred tax
asset to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to
be recovered. The probability of recognition is based
on the expected tax profits included in the Group’s
current business planning. The Group conversely
reduces the carrying amount of a deferred tax asset to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow the benefit of
part or that entire deferred tax asset to be utilized. A
deferred tax liability is recognized for all taxable
temporary differences, unless the deferred tax liability
arises from the initial recognition of goodwill or the
initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects
neither accounting nor taxable profit or loss.
4.20 Changes to accounting policies
New accounting pronouncements
The following amendments to standards, which are
effective for annual periods beginning on or before
January 1, 2022, have been applied by the Group for
the first time in preparing these consolidated financial
statements.
Standard/interpretation
Effective date
Amendments to IFRS 3 Business
Combinations; IAS 16 Property, Plant
and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent
Assets; and Annual Improvements
2018–2020 (all issued May 14, 2020)
January 1, 2022
The above amendments to standards and amended
interpretations did not have a significant effect on the
consolidated financial statements of the X-FAB Group.
New standards, amendments to standards, and
interpretations effective for annual periods
beginning after January 1, 2023
A number of new standards, amendments to
standards, and interpretations are not yet effective for
annual periods ended December 31, 2022, and have
not been applied in preparing these consolidated
financial statements.. These amendments are not
expected to have a material impact on the Group’s
consolidated financial statements.
Amendments to IAS 1 Presentation of Financial
Statements and IFRS Practice Statement 2:
Disclosure of Accounting Policies, issued on
February 12, 2021, include narrow-scope amendments
to improve accounting policy disclosures so that they
provide more useful information to investors and other
primary users of the financial statements. The
amendments to IAS 1 require companies to disclose
their material accounting policy information rather than
their significant accounting policies. The amendments
to IFRS Practice Statement 2 provide guidance on how
to apply the concept of materiality to accounting
policy disclosures.
The amendments are effective for annual periods
beginning on or after January 1, 2023, with early
application permitted. These amendments have been
endorsed by the EU.
Amendments to IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors:
Definition of Accounting Estimates, issued on
February 12, 2021, clarify how companies should
distinguish changes in accounting policies from
changes in accounting estimates. The distinction is
important because changes in accounting estimates
are applied prospectively only to future transactions
and other future events, but changes in accounting
policies are generally also applied retrospectively to
past transactions and other past events.
The amendments are effective for annual periods
beginning on or after January 1, 2023, with early
application permitted. These amendments have been
endorsed by the EU.
Amendments to IAS 12 Income Taxes: Deferred Tax
Related to Assets and Liabilities Arising from a
Single Transaction, issued on May 7, 2021, clarifies
how companies should account for deferred tax on
transactions such as leases and decommissioning
obligations. IAS 12 Income Taxes specifies how a
company accounts for income tax, including deferred
tax, which represents tax payable or recoverable in the
future. In specified circumstances, companies are
exempt from recognizing deferred tax when they
recognize assets or liabilities for the first time.
Previously, there had been some uncertainty about
whether the exemption applied to transactions such as
leases and decommissioning obligations — transactions
for which companies recognize both an asset and a
liability. The amendments clarify that the exemption
does not apply and that companies are required to
recognize deferred tax on such transactions. The aim
of the amendments is to reduce diversity in the
reporting of deferred tax on leases and
decommissioning obligations.
The amendments are effective for annual periods
beginning on or after January 1, 2023, with early
application permitted. These amendments have been
endorsed by the EU.
Annual Report 2022 | X-FAB consolidated financial statements
46
Amendments to IAS 1 Presentation of Financial
Statements:
• Classification of Liabilities as Current or Non-
current Date (issued on January 23, 2020);
• Classification of Liabilities as Current or Non-
current - Deferral of Effective Date (issued on July
15, 2020); and
• Non-current Liabilities with Covenants (issued on
October 31, 2022.
Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current
or Non-Current, issued on January 23, 2020, clarify a
criterion in IAS 1 for classifying a liability as non-current:
the requirement for an entity to have the right to defer
settlement of the liability for at least 12 months after
the reporting period.
The amendments:
–specify that an entity’s right to defer
settlement must exist at the end of the
reporting period;
–clarify that classification is unaffected by
management’s intentions or expectations
about whether the entity will exercise its right
to defer settlement;
–clarify how lending conditions affect
classification; and
–clarify requirements for classifying liabilities an
entity will or may settle by issuing its own
equity instruments.
On July 15, 2020, the IASB issued Classification of
Liabilities as Current or Non-current — Deferral of
Effective Date (Amendment to IAS 1) deferring the
effective date of the January 2020 amendments.
On October 31, 2022, the IASB issued Non-current
Liabilities with Covenants, which amends IAS 1 and
specifies that covenants (i.e. conditions specified in a
loan arrangement) to be complied with after the
reporting date do not affect the classification of debt
as current or non-current at the reporting date.
Instead, the amendments require a company to
disclose information about these covenants in the
notes to the financial statements.
All of the amendments are effective for annual
reporting periods beginning on or after January 1,
2024, with early adoption permitted. The amendments
have not yet been endorsed by the EU.
Amendments to IFRS 16 Leases: Lease Liability in a
Sale and Leaseback, issued on September 22, 2022,
introduce a new accounting model which will impact
how a seller-lessee accounts for variable lease
payments in a sale-and-leaseback transaction.
Under this new accounting model for variable
payments, a seller-lessee will:
–include estimated variable lease payments
when it initially measures a lease liability
arising from a sale-and-leaseback transaction;
and
–after initial recognition, apply the general
requirements for subsequent accounting of
the lease liability such that it recognizes no
gain or loss relating to the right of use it
retains
These amendments will not change the accounting for
leases other than those arising in a sale and leaseback
transaction.
The amendments apply retrospectively for annual
periods beginning on or after January 1, 2024, with
early application permitted. These amendments have
not yet been endorsed by the EU.
5 Business combinations
There have been no business combinations involving
the Group in the years ended December 31, 2022, or
December 31, 2021.
6 Notes to the consolidated statement of profit or
loss
6.1 Revenue
Revenue, which wholly and exclusively represents
revenue from contracts with customers, comprises the
following (refer to note 9 for revenue by geographic
concentration):
in thousands of U.S. dollars
2022
2021
Gross revenue PCM wafer
653,420
572,986
Gross revenue NRE and
technology services
92,217
89,290
Other revenue
16
19
Discounts and warranty
credits
(6,184)
(4,544)
Total
739,469
657,751
Revenues from production increased by 14%, driven by
a consistently strong demand across all end markets,
while revenue from prototyping increased by 3%.
No revenue is recognized in the current year from
performance obligations satisfied in prior years (e.g.
changes in transaction price).
47
6.2 Cost of sales
The cost of sales comprises the following:
in thousands of U.S. dollars
2022
2021
Employee-related expenses
(192,228)
(181,086)
Cost of materials
(167,034)
(156,937)
Costs of fixed assets
(maintenance, spare parts,
etc.)
(85,828)
(77,783)
Depreciation and
amortization
(67,854)
(66,194)
Facility costs
(69,532)
(60,332)
External services
(9,095)
(7,736)
Changes in inventories
12,427
22,303
Grants
16,642
20,240
Other
(1,013)
(248)
Total
(563,515)
(507,773)
The increase in cost of sales of 11% corresponds with
the increase in revenues of 12%.
Grants that are presented as an offset against cost of
sales include capital and income-related grants, which
in 2021 additionally included a one-off amount of
USD 6,563 thousand received in 2020 under the
“Paycheck Protection Program,” which had been
granted and subsequently forgiven under the U.S.
federal government’s Coronavirus Aid, Relief, and
Economic Security Act to secure payroll and utility
payments during the pandemic. Further details are
provided in note 7.10.
6.3 Research and development expenses
Research and development expenses comprise the
following:
in thousands of U.S. dollars
2022
2021
Employee-related expenses
(24,980)
(25,245)
Cost of materials
(9,923)
(10,279)
Costs of fixed assets
(maintenance, spare parts,
etc.)
(4,019)
(3,693)
Depreciation and
amortization
(1,586)
(1,371)
Facility costs
(869)
(949)
External services
(884)
(799)
Grants
5,643
10,681
Other
(4,185)
(2,655)
Total
(40,803)
(34,310)
Research and development expenses increased
consistently with the increased sales volume in 2022. It
is X-FAB’s policy to maintain a consistent rate of
research and development expenses in relation to
revenue.
6.4 Selling expenses
The selling expenses comprise the following:
in thousands of U.S. dollars
2022
2021
Employee-related expenses
(7,447)
(7,046)
Advertising costs and costs
of selling goods
(633)
(844)
External services
(139)
(154)
Facility costs
(143)
(147)
Depreciation and
amortization
(103)
(102)
Other
286
276
Total
(8,179)
(8,017)
6.5 General and administrative expenses
The general and administrative expenses comprise the
following:
in thousands of U.S. dollars
2022
2021
Employee-related expenses
(23,354)
(21,206)
External services
(5,946)
(3,864)
Depreciation and
amortization
(3,033)
(3,273)
Costs of fixed assets
(maintenance, spare parts,
etc.)
(3,989)
(3,232)
Insurance, dues, and fees
(1,468)
(1,522)
Facility costs
(1,103)
(1,128)
Grants
444
635
Other
962
819
Total
(37,487)
(32,771)
6.6 Expenses by nature
In the income statement, expenditures are classified by
function. Expenses include depreciation charges
allocated to the following items:
in thousands of U.S. dollars
2022
2021
Included in cost of sales
(67,000)
(65,232)
Included in research and
development expenses
(1,218)
(1,196)
Included in selling expenses
(103)
(102)
Included in general and
administrative expenses
(1,692)
(1,625)
Included in expenses related
to investment properties and
other expenses
(1,612)
(1,623)
Total
(71,625)
(69,778)
Annual Report 2022 | X-FAB consolidated financial statements
48
Expenses include charges for amortization of
intangible assets allocated to the following items:
in thousands of U.S. dollars
2022
2021
Included in cost of sales
(854)
(962)
Included in research and
development expenses
(368)
(175)
Included in general and
administrative expenses
(1,341)
(1,648)
Total
(2,563)
(2,785)
Employee-related expenses allocated according to
function in the income statement consist of the
following:
in thousands of U.S. dollars
2022
2021
Wages and salaries
(190,512)
(184,334)
Social security costs
(38,069)
(35,580)
Contributions to defined
contribution plans
(11,445)
(10,077)
Other employee-related
costs
(7,983)
(4,592)
Total
(248,009)
(234,583)
The increase in staff costs compared to the previous
year is primarily due to the general increase in business
activity.
Defined contribution plans primarily consist of
contributions made under statutory schemes by
employers to state-based defined contribution plans.
6.7 Rental income from investment properties
Rental income from investment properties comprises
the following:
in thousands of U.S. dollars
2022
2021
Income from technical
services provided
7,223
7,075
Income from investment
property rentals
6,425
6,876
Total
13,648
13,951
Property rentals and technical services for tenants
represent activities outside the X-FAB SE Group’s core
activities. Technical services mainly comprise the
supply of power, water, cooling water, ultra-pure water,
bulk gases, or compressed dry air.
6.8 Rental expenses related to investment
properties
Expenses related to investment properties comprise
the following:
in thousands of U.S. dollars
2022
2021
Expenses for technical
services provided
(9,176)
(8,956)
Expenses for connection
with investment property
rentals
(4,770)
(3,097)
Total
(13,946)
(12,053)
Expenses in connection with investment properties
primarily relate to depreciation and building
maintenance.
6.9 Other income
Other income comprises the following:
in thousands of U.S. dollars
2022
2021
Gains on disposals of
property, plant, and
equipment
3,899
600
Income from recharges
3,015
2,817
Income from other admin
services/cost sharing
527
693
Income from sales of
materials
188
199
Other
547
657
Total
8,176
4,966
The income from recharges primarily results from
charges for software maintenance costs to Melexis, a
related party, included in the disclosures presented in
note 12.
Gains on disposal of property, plant, and equipment in
2022 primarily related to sales of technical machinery
and equipment previously used by X-FAB France for
technologies in operation in its predecessor business
prior to it being acquired by the X-FAB Group.
6.10 Other expenses
Other expenses comprise the following:
in thousands of U.S. dollars
2022
2021
Settlement of a trade
dispute
(36,811)
—
Expenses from recharges
(3,015)
(2,817)
Losses on disposal of
property, plant, and
equipment
(10)
(325)
Other
(87)
(1,113)
Total
(39,923)
(4,255)
Expenses incurred to settle a trade dispute represent
the costs of settling a dispute with a supplier consisting
49
of payments for materials not purchased by the Group
in breach of binding order commitments in the years
2019 and 2020 (USD 36,811 thousand), together with
associated interest penalties (USD 12,624 thousand,
refer to note 6.12) and legal costs (USD 1,271
thousand). The settlement was the result of a final and
binding decision received under trade settlement
arbitration proceedings.
The expenses from recharges primarily relate to costs
in connection with recharges for software maintenance
provided to related parties. Refer to note 12.
6.11 Finance income
Finance income comprises the following:
in thousands of U.S. dollars
2022
2021
Interest on financial assets
measured at amortized cost:
Interest on cash and cash
equivalents
1,836
1,767
Other:
Income from exchange rate
differences
34,695
14,347
Total
36,531
16,114
The increase in income from exchange rate
differences is primarily due to the higher level of
currency exchange rate gains on cash balances
denominated in Malaysian ringgit and euros and from
the translation effects of euro-denominated loans and
of euro-denominated cash. The net expense (income
less expense disclosed in note 6.12) from exchange
rate differences decreased to USD 2,366 thousand
(2021: USD 4,503 thousand).
6.12 Finance costs
Finance costs comprise the following:
in thousands of U.S. dollars
2022
2021
Interest on financial liabilities
measured at amortized cost:
Loans and borrowings
(6,619)
(1,592)
Other interest
(12,624)
—
Other:
Expenses from exchange
rate differences
(37,061)
(18,850)
Other
(500)
—
Total
(56,804)
(20,442)
Other interest of USD 12,624 thousand refers to an
arbitration award as discussed in note 6.10.
Exchange rate expenses primarily result from the
translation effects of euro-denominated loans and of
Malaysian ringgit and euro-denominated cash.
Other items represent the write-down of a financial
asset received in lieu of unpaid overdue trade
receivables from a customer.
6.13 Income tax
Income taxes comprise German corporation and trade
taxes (plus solidarity surcharge), Belgian corporation
tax, French tax, and Malaysian tax on interest received.
United States federal income taxes have not been
incurred during the reporting period as no taxable
income was generated in that country or sufficient tax
losses were available to offset taxable income.
Income taxes comprised the following:
in thousands of U.S. dollars
2022
2021
Current taxes:
Actual income tax charge for
the period
(6,420)
(2,060)
Adjustment of prior years’
tax charges
(483)
(2,420)
(6,903)
(4,480)
Deferred taxes
22,332
15,253
Total
15,429
10,773
The Belgian applicable tax rate applicable for the
Group’s result was 25.00% in 2022 and 2021 . The
deferred tax assets and liabilities of the foreign
subsidiaries are valued based on local tax rates. The
Group’s various German operations incur federal
income taxes and local trade taxes which result in
overall applicable tax rates of between 31.58% and
32.28%. The federal income tax rate applicable to the
Group’s earnings in the United States is 21.00%, the tax
rate applicable on earnings in Malaysia amounts to
24.00%, and the tax rate applicable to X-FAB France is
25.00% (2021: 26.50%).
Annual Report 2022 | X-FAB consolidated financial statements
50
The reconciliation of the theoretical tax charge based
on the IFRS net income before tax is as follows for the
years 2022 and 2021:
in thousands of U.S.
dollars
2022
2021
Result before taxes
37,062
72,866
Theoretical tax at combined
applicable Belgian tax rate
(9,266)
(18,217)
Recognition of previously
unrecognized deferred tax
on timing differences and
tax losses
39,810
42,395
Current year losses for
which no deferred tax asset
is recognized
(13,463)
(12,457)
Adjustment of prior period
tax liabilities recorded in the
current period
(483)
(2,420)
Effect of tax-free income
1,206
1,580
Currency effects
(93)
(892)
Effect of permanent
differences
(290)
(89)
Effect of non-deductible
expenditures
(169)
(147)
Effect of changes in
applicable tax rates enacted
during the year
—
—
Effect of different tax rates
applying to foreign
operations
(1,889)
600
Differences which are only
valid for special taxes
66
420
Income/(expense) for
income taxes recognized
in the consolidated
statement of profit or loss
15,429
10,773
Previously unrecognized deferred tax on timing
differences and tax losses results in deferred tax
income as the Group recognizes deferred tax on
timing differences and tax losses which are expected
to be realized in the near future. As described below,
the amount recognized in the statement of financial
position is based on the Group’s current business
planning. The amount reported primarily consists of
deferred tax assets of USD 39,889 thousand
recognized in the Group’s Malaysian subsidiary at
December 31, 2022 (December 31, 2021: USD 39,209
thousand) and of USD 16,041 thousand (December 31,
2021: USD 2,974 thousand) recognized in the US
subsidiary. The income statement includes recognition
of previously unrecognized deferred tax on timing
differences and tax losses carried forward of
USD 42,966 thousand (previous year: USD 42,395
thousand) based on the carrying value at the reporting
date, less the amount recognized in the previous year,
after the amount recognized in the previous year had
been reduced by the assets utilized in the current year.
Current year losses for which no deferred tax asset is
recognized primarily arose in current and previous year
at the Group’s subsidiary in France.
Effects from tax-free income primarily relate to
various tax exempted items of X-FAB Sarawak, for
example interest income, exchange rate gains, gains
from fixed asset sales, and the gain on the
derecognition of the liability described in note 7.10.
Currency effects mainly relate to the effect of changes
in exchange rates on tax carrying amounts
denominated in euros in 2022 and 2021.
The deferred tax assets and liabilities arise from
temporary differences and unused tax losses as
follows:
in thousands of U.S. dollars
2022
2021
Deferred tax assets –
unrecognized amounts
On unused tax losses
198,038
215,947
On temporary differences
Property, plant, and
equipment/capital
allowances
239,582
278,996
Other temporary differences
6,107
1,613
Total unrecognized
deferred tax assets
443,727
496,556
Deferred tax assets –
recognized amounts
On unused tax losses
39,313
18,833
On temporary differences
Property, plant, and
equipment/capital
allowances
33,709
31,341
Other temporary differences
(5,045)
(4,529)
Total recognized deferred
tax assets
67,977
45,645
X-FAB SE Group recognizes deferred tax assets
resulting from temporary differences and from unused
tax losses which exceed the deferred tax liabilities only
to the extent that, on the basis of the Group’s business
planning, the realization of these assets is assessed as
probable. This assessment involves a review by
management of profits and losses expected in the
business plan and limiting recognition of the future tax
benefits to take account of potential variances against
the business plan. Accordingly, recognized and
unrecognized deferred tax assets are subject to
estimation uncertainty, and there is a significant risk
that the carrying amounts will require adjustment in
subsequent periods. The estimates are, in particular,
subject to the estimation uncertainties inherent in
business planning which affect the likely utilization of
unused tax losses and subject to potential changes in
exchange rates which affect the size of timing
differences.
51
Unrecognized temporary differences on property,
plant, and equipment and other timing differences
which can be used to offset future taxable income
mainly relate to the Group's Malaysian subsidiary.
More specifically for the assessment of future available
taxable profit a risk-adjusted profits approach was
applied to the forecasts included in the Group’s
business planning. This method was applied to reflect
the risk that actual taxable profits will fall short of the
expectations. The Board has determined that adjusting
the expected future taxable profits for this component
by using a risk factor is appropriate considering the
inherent risk in the semiconductor market and the
specific exchange rate volatility risks which affect the
assessment. In addition, the Board has determined that
taxable income as from 2026 does not meet the
“probable” threshold as required under IFRS standards
and is not taken into account for the determination of
the amount of deferred tax assets to be recognized.
In particular, tax legislation in the jurisdictions in which
the Group operates provides for the full or partial
cancellation of unused tax losses on the occurrence of
significant changes in the direct or indirect equity
ownership of the taxable entity. Accordingly, there is a
risk that recognized and unrecognized deferred tax
assets may not be realized should such transactions
occur in the future.
X-FAB SE and its subsidiaries have unused corporation
tax losses as follows:
in thousands of U.S. dollars
2022
2021
Belgian tax loss carry forward
—
—
German corporation tax loss
carry forward
141,136
172,876
German trade tax loss carry
forward
180,007
203,005
U.S. federal tax loss carry
forward
169,241
144,416
U.S. state tax loss carry
forward
39,650
14,825
Malaysian tax loss carry
forward
341,789
361,114
French tax loss carry forward
271,274
219,559
The Group’s French and German tax losses can be
carried forward indefinitely, whereby in France and
Germany there are restrictions on the amounts that
can be utilized in any specific year. U.S. federal tax
losses for years prior to 2018 expire, if unused, after a
period of 20 years. U.S. federal tax losses of USD 28.5
million expired in 2022 (2021: USD 3,591 thousand). The
Group estimates that further U.S. federal tax losses of
USD 27.8 million will expire in the year 2023 unless
utilized. Unabsorbed Malaysian business losses expire
after a period of seven years. The unused tax losses
changed as a result of tax losses in the year, tax losses
offset in the year, and, in addition, changes in currency
exchange rates. Insignificant changes resulted from
changes in estimates between the dates of
preparation of the previous year’s consolidated
financial statements and the finalization of the tax
returns and tax assessments of individual entities.
Significant deferred tax balances arise in respect of tax
losses carried forward and on timing differences on
property, plant, and equipment. A summary of the
movements is presented in the table below. Deferred
tax balances on other balance sheet positions are
presented on a combined basis for this purpose.
Annual Report 2022 | X-FAB consolidated financial statements
52
in thousands of U.S. dollars
Tax losses
carried forward
Property, plant,
and equipment
Other
temporary
differences
Total
Balance at January 1, 2021
12,380
26,144
(8,131)
30,393
Recognized in profit and loss
6,453
5,197
3,602
15,252
Recognized in other comprehensive income
—
—
—
—
Balance at December 31, 2021
18,833
31,341
(4,529)
45,645
Set off of tax
—
3,794
(3,794)
—
Net balance at December 31, 2021
18,833
35,135
(8,323)
45,645
Balance at January 1, 2022
18,833
31,341
(4,529)
45,645
Recognized in profit and loss
20,480
2,368
(516)
22,332
Recognized in other comprehensive income
—
—
—
—
Balance at December 31, 2022
39,313
33,709
(5,045)
67,977
Set off of tax
1,141
(1,141)
—
Net balance at December 31, 2022
39,313
34,850
(6,186)
67,977
Changes in recognized deferred tax assets resulted in
a deferred tax income of USD 22,332 thousand (2021:
income of USD 15,252 thousand). The increase in
previously unrecognized deferred tax assets on
property, plant, and equipment and other timing
differences recognized in 2022 compared to 2021 is
due to a higher level of taxable income from achieved
and projected operating results at the Group’s
subsidiaries against which timing differences can be
offset.
No tax income tax expenses or income have been
recorded on items recorded within other
comprehensive income (previous year: none).
6.14 Earnings per share
The earnings per share is calculated by dividing the
profit for the period attributable to the ordinary
shareholders (as reported in the statement of profit or
loss and other comprehensive income) by the
weighted average number of shares in issue during the
period.
The weighted average number of ordinary shares is
identical to the number of ordinary shares in issue
during the years ended December 31, 2022, and
December 31, 2021.
No instruments with a potential diluting effect on
shareholders’ equity have been in issue during the
years ended December 31, 2022, and December 31,
2021. Accordingly, there is no potential dilution of the
profit attributable to equity shareholders and no
difference between basic and diluted earnings per
share.
53
7 Notes to the statement of financial position
7.1 Property, plant, equipment, and investment properties
in thousands of U.S.
dollars
Land
Buildings
Technical
machinery
and
equipment
Factory and
office
equipment
Assets under
construction
Total
Net book value
January 1, 2022
14,110
37,843
209,401
5,816
73,500
340,670
Accumulated
historical cost
January 1, 2021
14,292
111,273
1,095,858
31,408
73,500
1,326,331
Additions
—
88
28,738
2,266
159,463
190,555
Disposals
—
—
(11,275)
(1,943)
—
(13,218)
Reclassifications
—
666
62,033
1,530
(64,243)
(14)
Effect of changes in
exchange rates
—
—
—
27
—
27
Accumulated
historical cost
December 31, 2021
14,292
112,027
1,175,354
33,288
168,720
1,503,681
Accumulated
depreciation
January 1, 2022
(182)
(73,430)
(886,457)
(25,592)
—
(985,661)
Additions
(30)
(3,568)
(64,419)
(2,973)
—
(70,990)
Disposals
—
—
11,200
1,889
—
13,089
Reclassifications
—
—
—
23
—
23
Effect of changes in
exchange rates
—
—
—
(16)
—
(16)
Accumulated
depreciation
December 31, 2022
(212)
(76,998)
(939,676)
(26,669)
—
(1,043,555)
Net book value
December 31, 2022
14,080
35,029
235,678
6,619
168,720
460,126
Net book value
January 1, 2021
14,139
40,554
232,686
4,855
44,614
336,848
Accumulated
historical cost
January 1, 2020
14,291
110,466
1,068,016
28,009
44,614
1,265,396
Additions
1
80
11,850
1,490
60,322
73,743
Disposals
—
(5)
(12,106)
(322)
—
(12,433)
Reclassifications
—
732
28,098
2,220
(31,436)
(386)
Effect of changes in
exchange rates
—
—
—
11
—
11
Accumulated
historical cost
December 31, 2020
14,292
111,273
1,095,858
31,408
73,500
1,326,331
Accumulated
depreciation
January 1, 2021
(152)
(69,912)
(835,330)
(23,154)
—
(928,548)
Additions
(30)
(3,523)
(62,853)
(2,740)
—
(69,146)
Disposals
—
5
11,726
308
—
12,039
Effect of changes in
exchange rates
—
—
—
(6)
—
(6)
Accumulated
depreciation
December 31, 2021
(182)
(73,430)
(886,457)
(25,592)
—
(985,661)
Net book value 
December 31, 2021
14,110
37,843
209,401
5,816
73,500
340,670
Annual Report 2022 | X-FAB consolidated financial statements
54
Property, plant, and equipment
Additions in technical machinery and equipment and
additions in assets under construction mainly refer to
capital investments in technical machinery in, X-FAB
France (USD 58 million), X-FAB Sarawak (USD 58
million), X-FAB Texas (USD 41 million), X-FAB Erfurt
(USD 6 million), X-FAB Dresden (USD 18 million),
X‑FAB MEMS Foundry Itzehoe (USD 1 million), and
X‑FAB MEMS Foundry (USD 7 million). Assets under
construction primarily include investments in technical
machinery. Additions in property, plant, and equipment
resulted in cash outflows in 2022 of USD 180,580
thousand (2021: USD 66,972 thousand). Refer to the
statement of cash flows.
The Group received investment grants related to the
acquisition of qualifying assets totaling USD 945
thousand (2021: USD 535 thousand).
No impairment tests were performed in the financial
year ended December 31, 2022 as there were no
triggering events that would have required impairment
tests to be performed.
Accumulated historical costs have been reduced by
investment grants received of USD 137,517 thousand
(December 31, 2021: USD 136,121 thousand) and
accumulated depreciation has been reduced by
USD 126,159 thousand (December 31, 2021:
USD 122,880 thousand).
At December 31, 2022 property, plant, and equipment
with a book value of USD 23 million (December 31,
2021: USD 31 million) had been provided as collateral
security to third-party lenders. The carrying values of
technical machinery and equipment include USD 21.4
million (December 31, 2021: USD 22.0 million) which are
not owned by the Group but which are held under
leasing arrangements as disclosed in note 11.
Investment properties
Investment properties consist of properties let to third
parties by X-FAB GmbH, X-FAB Dresden, X-FAB
Texas, and X-FAB France. The lease arrangements, the
majority of which expire at various dates until 2024,
continue after expiry unless canceled by either party
within notice periods of between one month and six
months.
Investment properties are accounted for at purchase
cost less straight-line depreciation. The book and fair
values of these properties at the reporting date were
as follows:
in thousands of U.S. dollars
2022
2021
Net book value, beginning
of period
8,309
8,556
Additions
—
—
Depreciation
(635)
(632)
Disposals
—
—
Reclassifications
—
385
Net book value, end of
period
7,674
8,309
Accumulated cost
33,647
33,647
Accumulated depreciation
(25,974)
(25,339)
Fair value
32,845
26,258
Properties are reclassified between the land and
buildings and investment properties classifications
when there is a change in the use of the property (for
example, when a property previously used by the
Group is let to third parties or the Group uses a
property previously let to third parties).
Additions to investment properties represents work
capitalized on the Group’s existing investment
properties.
The fair values of the investment properties relate to
properties in Germany (December 31, 2022: USD
17,025 thousand; December 31, 2021: 9,374 thousand),
the USA (December 31, 2022: USD 1,698 thousand;
December 31, 2021: 2,039 thousand), and France
(December 31, 2022: USD 14,122 thousand; December
31, 2021: 14,845 thousand). The fair value
measurements of the investment properties have
been categorized as a Level 3 fair value based on the
inputs to the valuation techniques used. The valuations
disclosed of the Group’s investment properties are
updated annually. In the U.S. and in France the
valuations were performed by independent third-party
experts with the appropriate professional qualifications
and the necessary expertise in the location and
category of property. In Germany they are performed
by the management of X-FAB SE Group, calculated on
the basis of discounted future cash flows, and
discounting future rents at a rate of 4.0% (December
31, 2021: 1.5%). The valuation model takes into account
the rent per square meter, expected rental growth
rates, other costs, and the maturity of the contracts.
No impairment charges were recorded against
investment properties in 2022 or 2021.
55
The following table sets out a maturity analysis of lease
payments which will be received in respect of
investment properties, showing the undiscounted
lease payments to be received after the reporting
date.
in thousands of U.S. dollars
2022
2021
2022
—
5,034
2023
5,017
5,125
2024
5,630
1,063
2025
1,797
1,063
2026
1,797
1,063
2027
1,371
—
Total
15,612
13,348
7.2 Intangible assets
The movements on intangible assets were as follows:
in thousands of U.S. dollars
Licenses
Payments on
account
Total
Net book value January 1, 2022
2,656
1,378
4,034
Accumulated historical cost January 1, 2022
71,374
1,378
72,752
Additions
2,314
2,335
4,649
Disposals
(14,106)
—
(14,106)
Reclassifications
1,888
(1,895)
(7)
Effect of changes in exchange rates
86
—
86
Accumulated historical cost December 31, 2022
61,556
1,818
63,374
Accumulated amortization January 1, 2022
(68,718)
—
(68,718)
Additions
(2,563)
—
(2,563)
Disposals
14,106
—
14,106
Accumulated amortization December 31, 2022
(57,175)
—
(57,175)
Net book value December 31, 2022
4,381
1,818
6,199
Net book value January 1, 2021
3,585
1,141
4,726
Accumulated historical cost January 1, 2021
69,533
1,141
70,674
Additions
768
1,325
2,093
Disposals
(15)
—
(15)
Reclassifications
1,088
(1,088)
—
Accumulated historical cost December 31, 2021
71,374
1,378
72,752
Accumulated amortization January 1, 2021
(65,948)
—
(65,948)
Additions
(2,785)
—
(2,785)
Disposals
15
—
15
Accumulated amortization December 31, 2021
(68,718)
—
(68,718)
Net book value December 31, 2021
2,656
1,378
4,034
Disposals refer to software licenses from which the
Group obtains no further benefit.
Intangible assets in the statement of financial position
do not include any capitalized costs of internally
generated assets. Payments on account refer to
advance and milestone payments made for the
acquisition of software licenses and the customization
of such software in a project not yet fully completed.
Refer to note 4.9.
No impairment against the carrying values of payments
on account was recorded in 2022 or 2021.
7.3 Inventories
Inventories comprise the following:
in thousands of U.S. dollars
2022
2021
Materials and supplies
124,760
106,020
Work in progress
95,383
78,495
Finished goods
3,723
2,050
Merchandise
6
6
Write-downs
(9,437)
(5,558)
Total
214,435
181,013
Annual Report 2022 | X-FAB consolidated financial statements
56
Changes in work in progress and finished goods
totaling USD 14,824 thousand were included in cost of
sales in 2022 (2021: USD 22,844 thousand). Write-
downs are recorded against inventories and
recognized as an expense in cost of sales in the period
of USD 2,397 thousand (2021: USD 541 thousand).
There have not been any reversals of write-downs.
Inventories wholly represent amounts which are
expected to be realized within 12 months.
7.4 Trade and other receivables
Trade receivables and other receivables comprise the
following:
in thousands of U.S. dollars
2022
2021
Trade accounts receivable
43,989
49,500
Amounts due from related
party entities
30,214
25,217
Allowances
(1,087)
(1,028)
Total
73,116
73,689
Trade receivables are generally on 30 to 90-day terms
and are non-interest bearing. They are classified as
financial assets at amortized cost for financial reporting
purposes. Under consideration of allowances made,
the fair values of trade receivables approximate their
carrying amount. The amounts due from related
parties are in respect of trade accounts receivable
balances.
As at December 31, the aging analysis of trade
accounts receivables (third parties, net of allowances)
is as follows:
in thousands of U.S. dollars
2022
2021
Neither past due nor
impaired
31,463
30,305
Past due 1–30 days
9,207
17,004
Past due 31–60 days
1,592
615
Past due 61–360 days
640
548
Past due > 360 days
—
—
Total
42,902
48,472
The Group measures the expected credit losses of
trade receivables by using an allowance matrix to
measure the expected losses on trade receivable
balances, including those with related parties. The
allowances are based on the number of days each
balance is overdue. The assessment of expected
losses on trade receivable balances that are not
impaired is based on past experience of credit losses,
which the Group considers to be a reasonable
approximation of the losses that can be expected in
future periods since there are no indications that there
will be significant changes in the industry going
forward. An analysis of receivables by geographic
region or by type of customer is not made since X-FAB
mainly deals with global customers and hence there is
no significant difference in risks between the
geographic regions where X-FAB is active or the type
of customers served by X-FAB. The amount of trade
receivables due from related parties is disclosed
separately from trade receivables in the table above
and in the related party disclosures in note 12 below.
In addition, X-FAB recorded several additional
allowances on individual case-by-case assessments for
credit-impaired balances.
A settlement arrangement was entered into in 2021
with a customer, a related party, concerning
outstanding receivables in excess of 360 days overdue
totaling USD 1,277 thousand. Impairment allowances of
USD 848 thousand had been recorded in 2020 against
these balances. Under this arrangement, collateral
security in the form of certain intellectual property
rights was transferred by the customer to the Group as
final settlement of the outstanding balances due. The
Group valued the collateral security received at
USD 484 thousand, and accordingly the outstanding
amounts were derecognized and a gain on
derecognition of the receivables, net of allowances, of
USD 55 thousand was recognized in 2021. The
intellectual property rights received have been
recognized as intangible assets on initial recognition at
their fair value. The fair value of the intellectual
property rights received was estimated by
management based on the discounted royalties which
can be earned on the expected future product sales
that will generated using the intellectual property,
discounted using a weighted average cost of capital
(WACC). The WACC was obtained by reference to a
risk-free interest rate and entity-specific risk premiums
obtained by reference to external third party reference
databases (a level 3 valuation).
The following tables provide information on the
exposure to credit risk and the loss allowances made
for balances which are not credit impaired as at
December 31, 2022, and December 31, 2021:
December 31, 2022
in thousands of
U.S. dollars
Weighted
average
loss rate
Gross
carrying
amount
Loss
allowance
Neither past due
nor impaired
0.08%
61,589
(49)
Past due 1–30
days
0.08%
8,917
(7)
Past due 31–60
days
1.50%
1,388
(21)
Past due 61–90
days
3.75%
264
(10)
More than 90
days past due
(less credit
impaired)
9.75 %
958
(93)
Total
73,116
(180)
57
December 31, 2021
in thousands of
U.S. dollars
Weighted
average
loss rate
Gross
carrying
amount
Loss
allowance
Neither past due
nor impaired
0.08%
56,462
(45)
Past due 1–30
days
0.08%
15,431
(12)
Past due 31–60
days
1.50%
742
(11)
Past due 61–90
days
3.75%
343
(13)
More than 90
days past due
(less credit
impaired)
9.75 %
711
(69)
Total
73,689
(150)
in thousands of U.S. dollars
2022
2021
Balance at January 1
(1,028)
(1,513)
Impairment loss recognized
(58)
(275)
Use of allowance
2
784
Reversal of allowance
27
—
Net remeasurement of loss
allowance
(30)
(24)
Balance at December 31
(1,087)
(1,028)
There are no balances which were written off during
the period and which continue to be the subject of
collection processes.
7.5 Other assets
Other assets comprise the following:
in thousands of U.S. dollars
2022
2021
Other assets
55,768
42,609
Other non-current assets
79
28
Total
55,847
42,637
Current other assets comprise the following:
in thousands of U.S. dollars
2022
2021
R&D grants receivable
22,537
18,596
Prepaid expenses
20,700
18,112
Receivables from energy
surcharges
4,872
3,116
Taxes (other)
5,676
1,512
Investment grants and
subsidies receivable
1,170
480
Deposits
535
341
Other
278
452
Total
55,234
42,268
Research and development grants receivable in 2022
include USD 20,194 thousand research and
development tax credits and competitiveness and
employment tax credits attributable to X-FAB France
(December 31, 2021: USD 15,895 thousand).
Research and development tax credits and
competitiveness and employment tax credits
attributable to X-FAB France totaling USD 8,227
thousand (2021: USD 9,217 thousand) were sold
without recourse to a bank in 2022. The carrying
amounts of the credits sold generated cash inflows of
USD 7,245 thousand (2021: USD 8,928 thousand) net
of USD 982 thousand representing interest expenses
and fees (2021: USD 233 thousand). On initial
recognition, X-FAB France presents the grant
receivables as a reduction of cost of sales and research
and development expenses, consistent with the
Group’s general presentation of subsidized expenses.
The sales accelerate the cash inflows from tax credits;
in the normal course of events where the credits are
not sold they can be offset against income tax payable
by X-FAB France or will be paid to X-FAB France at a
subsequent date if there is no income tax to be paid.
Due to the sale, these repayments will be received by
the bank directly. There are no remaining ongoing
obligations to be fulfilled by X-FAB France in respect
of the tax credits and the credits have been
derecognized and the amounts received by the bank
have been recognized as cash and cash equivalents.
Prepaid expenses refer to prepayments made for raw
materials.
The deposits mainly represent security deposits
provided as collateral security and are classified as
current assets as they are either in connection with
contractual arrangements which may be canceled at
short notice or are expected to be released within
12 months on other grounds.
7.6 Cash and cash equivalents
Cash and cash equivalents comprise the following:
in thousands of U.S. dollars
2022
2021
Cash and bank balances
367,221
287,907
Term deposits
2,204
2,280
Total
369,425
290,187
Term deposits and some cash at bank balances earn
interest at floating rates based on daily bank deposit
rates. The fair values of cash and short-term deposits
are identical to the carrying amounts.
7.7 Equity
Share capital
X-FAB Silicon Foundries SE had 130,781,669 fully paid-
in ordinary shares in issue at December 31, 2022, and
December 31, 2021. Each share carries one vote at the
Company’s general meetings. There are no unissued
shares authorized for issue.
Annual Report 2022 | X-FAB consolidated financial statements
58
Share premium
The share premium of X-FAB Silicon Foundries SE
represents the excess of paid-in capital for shares at
the time of their issue over the fractional value of the
shares.
Retained earnings
Retained earnings represent the accumulated profits
and losses of the Group together with the
accumulated balance of the remeasurement of the
Group‘s defined benefit post employment benefit
plans.
Cumulative translation adjustment
The translation reserve comprises all foreign currency
differences arising from the translation of the financial
statements of foreign operations that have functional
currencies other than USD.
Treasury shares
At December 31, 2022 the Group held 149,748 treasury
shares of X-FAB Silicon Foundries SE held by its fully
owned subsidiary X-FAB GmbH. Based on the
purchase price of EUR 11.25 per share, the treasury
shares reduced the equity capital of the parent
company by USD 770 thousand (December 31, 2021:
USD 770 thousand).
Share-based payment arrangements
The Group had no share-based payment
arrangements and no share option programs during
the years ended December 31, 2022, or December 31,
2021.
Authorization to acquire treasury shares
In accordance with the Belgian Companies and
Associations Code, the Articles of Association permit
the Company to acquire, on or outside the stock
market, its own shares, profit-sharing certificates or
associated certificates by resolution approved by the
shareholders’ meeting by a majority of at least 75% of
the votes cast where at least 50% of the share capital
and at least 50% of the profit certificates, if any, are
present or represented. Prior approval by the
shareholders is not required if the Company purchases
the shares in order to offer them to the Company’s
employees.
The shares, profit-sharing certificates, or associated
certificates can only be acquired with funds that would
otherwise be available for distribution as dividend. The
total nominal value or fractional value of the shares,
profit-sharing certificates, or associated certificates
held by the Company can at no time be more than 20%
of the share capital. Voting rights attached to shares
held by the Company as treasury shares are
suspended.
On April 28, 2022, an extraordinary shareholders’
meeting authorized the Board of Directors to purchase
up to 20% of the outstanding shares, for a price not
lower than 10% below the lowest closing price in the last
30 trading days preceding the transaction and not
more than 5% above the highest closing price during
the last 30 trading days preceding the transaction. This
authorization is valid for five years from April 28, 2022.
The above authorization is also valid if the acquisition
was made by one of the subsidiaries directly controlled
by the Company, as set out in Article 5 SE Regulation
juncto Article 7:221 of the Belgian Companies and
Associations Code.
The Board of Directors is authorized to divest all or
part of the shares, profit-sharing certificates, or
associated certificates at a price it determines, on or
outside the stock market or in the framework of its
remuneration policy to employees, directors, or
consultants of the Company, or to prevent any serious
and imminent harm to the Company. This authorization
is valid without any restriction in time, except when the
divestment is made to prevent serious and imminent
harm to the Company, in which case the authorization
is only valid for three years as from the date of the
publication of the authorization in the Annexes to the
Belgian State Gazette (Belgisch Staatsblad/Moniteur
belge) (i.e. May 2, 2022). The authorization covers the
divestment of the shares, profit-sharing certificates, or
associated certificates by a direct subsidiary of the
Company, as set out in Article 5 SE Regulation juncto
Article 7:221 of the Belgian Companies and
Associations Code.
7.8 Dividends
No dividends were resolved or paid in the years 2022
or 2021.
Under Belgian company law, the shareholders decide
on the distribution of profits at the annual
shareholders’ meeting, based on the latest audited
statutory accounts of the Company. Dividends may be
paid either in cash or in kind. However, shareholders
may not declare a dividend if the Company has not first
reserved at least 5% of its profits for the financial year
until such reserve has reached an amount equal to 10%
of its share capital (the “Legal Reserve”) or if, following
any such dividend, the level of the net assets adjusted
for the unamortized balance of the incorporation costs
and capitalized research and development costs of the
Company falls below the amount of the Company’s
paid-in-capital and of its non-distributable reserves.
The Board of Directors may pay an interim dividend,
provided certain conditions set forth in Belgian
company law are met.
59
7.9 Non-controlling interests
Non-controlling interests represented a 5.1% interest in
the subsidiary GVG which was held by external
shareholders until its acquisition by the X-FAB Group
on September 1, 2022. GVG, which has subsequently
been merged into a wholly owned Group subsidiary,
was a property management company responsible for
the administration of certain of the Group’s properties
in Dresden, Germany. GVG’s net profit for the financial
year 2022 until the date on which the non-controlling
interests were acquired amounted to USD 595
thousand (full year 2021: net profit of USD 807
thousand). At the date on which the non-controlling
interests were acquired GVG had total assets
amounting to USD 8,777 thousand (December 31,
2021: USD 9,084 thousand), liabilities of USD 3,996
thousand (December 31, 2021: USD 4,887 thousand),
and equity of USD 4,781 thousand (December 31, 2021:
USD 4,197 thousand). The purchase price paid to
acquire the non-controlling interest amounted to
USD 204 thousand and was paid in cash. As GVG was
already controlled by the X-FAB Group, the purchase
of additional shares in the subsidiary (so reducing NCI)
did not result in the recognition goodwill or other
adjustments to the initial accounting for the
consolidation of the entity and the transaction was
wholly recognized within equity as a transaction with
owners of the entity. The currency translation effect of
the retranslation of non-controlling interests in GVG is
not material to the movements on other
comprehensive income or the statement of changes in
equity.
7.10 Loans and borrowings
The Group has unused credit lines available under bank
loan facilities as follows:
in thousands of U.S. dollars
2022
2021
Unused credit lines
Unused part of multicurrency
revolving credit facility
denominated in EUR or in
USD – variable rates
2,000
152,494
Interest rate USD: SOFR +
1.25%
Interest rate EUR: EURIBOR
+1.0%
Unused credit lines
denominated in EUR – fixed
rates
7,473
4,520
Interest rate: 3.75–4.01%
Other unused credit lines
denominated in EUR –
variable rates
2,135
5,651
Interest rates: EURIBOR
+2.5%
Annual Report 2022 | X-FAB consolidated financial statements
60
The carrying amounts of the Group’s loans and borrowings at December 31 are shown in the following table:
in thousands of U.S. dollars
2022
2021
Bank loans and overdrafts
Variable interest bank overdrafts in EUR
Maturity: 2023
2
—
Interest rates: EURIBOR + 2.5%
Fixed interest bank loans denominated in EUR
67,380
23,247
Maturity: 2023–2029
Interest rates: 0.85–2.3%
Repayments in monthly or quarterly installments
Variable interest revolving credit facility denominated in USD
138,998
30,582
Maturity: 2023
Interest rates: SOFR + 1.67%
Repayment on maturity
Variable interest revolving credit facility denominated in EUR
64,056
42,944
Maturity: 2023
Interest rates: EURIBOR + 1.0%
Repayment on maturity
Leasing arrangements
Leasing liabilities denominated in EUR
13,467
15,256
Maturity: 2023–2034
Interest rates: 0.02–1.91%
Repayment in monthly installments
Leasing liabilities denominated in USD
7,018
6,903
    Maturity: 2023–2034 
Interest rates: 3.32%
Repayment in monthly installments
Leasing liabilities denominated in MYR
6,024
8,098
Maturity: 2023–2025
Interest rates: 4.66%
Repayment in monthly installments
Total
296,945
127,030
Current loans and borrowings
233,513
87,114
Non-current loans and borrowings
63,432
39,916
Variable interest bank loans include loans amounting to
USD 138,000 thousand and EUR 60,000 thousand
(December 31, 2021: USD 31,000 thousand and
EUR 38,000 thousand) under the EUR 200,000,000
multicurrency revolving facility agreement (“the
facility”) entered into between the parent company
and its principal subsidiaries and a syndicate of eight
international banks on December 1, 2021. The credit
facility is for a five-year period until December 2026,
with an option for X-FAB to request an extension of
the facility’s maturity date until December 2027. The
option is exercisable not earlier than 90 days prior to
and not 45 days later than prior to the initial
termination date of November 30, 2026.
The movements on loans and borrowing include
exchange rate gains of USD 1,151 thousand resulting
from the translation of euro-denominated loans and
borrowings (2021: exchange rate gains of USD 2,627
thousand).
61
The fair values of the Group’s loans and borrowings are
presented in note 10.
Approximately 32% of the Group’s borrowings are at a
fixed rate of interest (December 31, 2021: 42%). Refer
to note 10.
Bank loans and overdrafts of USD 18,548 thousand
(2021: USD 20,281 thousand) are secured by charges
on plant and machinery and land (see note 7.1).
A bank loan with a carrying value of USD 6,563
thousand at December 31, 2020 was derecognized and
reported in the previous financial year as a deduction
from cost of sales. The loan, obtained and paid to
X‑FAB Texas in 2020, was issued under the “Paycheck
Protection Program” established by the U.S. federal
government’s Coronavirus Aid, Relief, and Economic
Security Act to secure payroll and utility payments.
Under the terms of the program, the borrower was
entitled to apply for forgiveness of the loan by
December 31, 2020, provided certain conditions
regarding retention and rehiring of employees had
been met and provided the government still had
sufficient budget available to forgive those loans. An
application for forgiveness of the bank loan was made
in the financial year 2020 and was approved on
June 10, 2021. Accordingly the balance on the loan was
released to income and was offset against cost of sales
matching the classification of the costs – direct
production-related costs – which were financed under
the program.
Contractual maturities
The contractual maturities of the Group’s non-
derivative financial liabilities (including lease liabilities)
at December 31, 2022, and December 31, 2021 are
shown in the table below. The amounts presented in
the table are undiscounted and do not include interest
as most of the liabilities are linked to credit facilities for
which interest can fluctuate over time depending on
the level of the used part of these facilities:
in thousands of U.S. dollars
2022
2021
2022
87,880
2023
230,414
13,687
2024
22,440
8,733
2025
18,965
4,753
2026
13,472
2,556
2027–2034
11,654
9,421
Total
296,945
127,030
The Group is exposed to a liquidity risk in that the
maturity of bank loan agreements, which are presented
based on the contractual payment obligations, could
be brought forward should the Group fail to comply
with its contractual obligations under the bank loan
agreements.
Annual Report 2022 | X-FAB consolidated financial statements
62
The following table provides a reconciliation of the movements in liabilities to the cash flows arising from financing
activities for the year 2022:
in thousands of U.S.
dollars
Liabilities
Equity
Loans and
borrowings
Lease
liability
Share
capital
Share
premium
Retained
earnings
NCI
Total
Balance at
December 31, 2021
96,773
30,257
432,745
348,709
(36,155)
365
872,694
Changes from
financing cash flows
Proceeds from loans and
borrowings
184,272
—
—
—
—
—
184,272
Repayment of loans and
borrowings
(11,420)
—
—
—
—
—
(11,420)
Repayment of loans and
borrowings from related
parties
—
—
—
—
—
—
—
Receipts from sale and
leaseback arrangements
—
7,723
—
—
—
—
7,723
Payments of lease
liabilities
—
(5,662)
—
—
—
—
(5,662)
Interest paid
(5,188)
—
—
—
—
(5,188)
Payment of preference
dividend
—
—
—
—
—
—
—
Distribution to non-
controlling interests
—
—
—
—
—
(11)
(11)
Receipt of investment
government grants and
subsidies
—
—
—
—
—
—
—
Total changes from
financing cash flows
167,664
2,061
—
—
—
(11)
169,714
Other changes
Effect of changes in
foreign exchange rates
(622)
(543)
—
—
—
—
(1,165)
Liability related
New leases in prior year,
funds received in current
year
—
(7,190)
—
—
—
—
(7,190)
Prolongation of existing
lease contracts
—
1,924
—
—
—
1,924
Interest expenses
6,619
—
—
—
—
6,619
Gain on derecognition of
financial liability
—
—
—
—
—
—
—
Equity related
—
—
—
—
52,663
—
52,663
Total liability-related
other changes
6,619
(5,266)
—
—
—
—
1,353
Total equity-related
other changes
—
—
—
—
—
(354)
(354)
Balance at
December 31, 2022
270,434
26,509
432,745
348,709
16,508
—
1,094,905
63
The following table provides a reconciliation of the movements in liabilities to the cash flows arising from financing
activities for the year 2021:
in thousands of U.S.
dollars
Liabilities
Equity
Loans and
borrowings
Lease
liability
Share
capital
Share
premium
Retained
earnings
NCI
Total
Balance at
December 31, 2020
51,573
24,636
432,745
348,709
(120,604)
344
748,440
Changes from
financing cash flows
Proceeds from loans and
borrowings
82,585
—
—
—
—
—
82,585
Repayment of loans and
borrowings
(28,218)
—
—
—
—
—
(28,218)
Repayment of loans and
borrowings from related
parties
—
—
—
—
—
—
—
Payments of lease
liabilities
—
(5,094)
—
—
—
—
(5,094)
Interest paid
(1,569)
—
—
—
—
—
(1,569)
Payment of preference
dividend
—
—
—
—
—
—
—
Distribution to non-
controlling interests
—
—
—
—
—
(12)
(12)
Receipt of investment
government grants and
subsidies
—
—
—
—
—
—
—
Total changes from
financing cash flows
52,798
(5,094)
—
—
—
(12)
47,692
Other changes
Effect of changes in
foreign exchange rates
(2,627)
(86)
—
—
—
—
(2,713)
Liability related
New leases
—
8,488
—
—
—
—
8,488
Prolongation of existing
lease contracts
—
2,313
—
—
—
—
2,313
Interest expenses
1,592
—
—
—
—
—
1,592
Gain on derecognition of
financial liability
(6,563)
—
—
—
—
—
(6,563)
Equity related
—
—
—
—
84,449
33
84,482
Total liability-related
other changes
(4,971)
10,801
—
—
—
—
5,830
Total equity-related
other changes
—
—
—
—
84,449
33
84,482
Balance at
December 31, 2021
96,773
30,257
432,745
348,709
(36,155)
365
872,694
Annual Report 2022 | X-FAB consolidated financial statements
64
7.11 Other non-current liabilities
Other non-current liabilities primarily comprise defined
benefit pension obligations and deferred rental
income.
Other non-current liabilities include an amount of
USD 3,967 thousand at December 31, 2022
(December 31, 2021: USD 5,620 thousand),
representing the net defined benefit obligations under
a long-service retirement lump-sum payment scheme
at the Group’s subsidiary X-FAB France. An additional
USD 546 thousand (December 31, 2021: USD 0
thousand) of defined benefit obligations relating to
this plan are recorded as other current liabilities. The
net defined benefit obligation consists of defined
benefit obligations under the scheme of USD 8,547
thousand (December 31, 2021: USD 9,974 thousand)
less plan assets recorded at their fair values of
USD 4,034 thousand (December 31, 2021: USD 4,354
thousand). Under this scheme, X-FAB France awards
its employees a lump-sum payment on reaching
retirement age of 65 (for management employees)
and 62 (for other employees). The payment is
dependent on the final salary of the employee and the
length of time the employee has been employed by
X‑FAB France. Employees are not required to
contribute to the plan. The liability recognized for the
future defined benefit obligation under this scheme is
presented net of the funding plan assets which are
“ring fenced” to meet obligations under the scheme.
The plan assets at December 31, 2022 consist of
investments in a fund that is managed by a financial
institution of which the underlying assets relate to
long-term bonds with capital guarantees of USD 1,844
thousand at December 31, 2022 (December 31, 2021:
USD 1,918 thousand) and equity savings plans with a
value of USD 2,189 thousand at December 31, 2022
(December 31, 2021: USD 2,436 thousand).
Accordingly, there are risks typical of such defined
benefit obligations, i.e. actuarial risks associated with
the uncertainties of the estimated obligations under
the scheme and with the anticipated performance of
the investment assets held to offset the obligations
under the scheme.
in thousands of U.S. dollars
DBO
Fair value of
plan assets
Net defined
benefit liability
January 1, 2022
9,974
(4,354)
5,620
Included in profit or loss:
Current service cost
484
—
484
Past service cost/curtailment
—
—
—
Currency effects from conversion into USD
(563)
431
(132)
Included in OCI:
Return on plan assets
—
(111)
(111)
Actuarial losses
(295)
—
(295)
Other:
Contributions paid by the employer
—
—
—
Benefits paid
(1,053)
—
(1,053)
December 31, 2022
8,547
(4,034)
4,513
—
January 1, 2021
8,571
(4,272)
4,299
Included in profit or loss:
Current service cost
382
—
382
Past service cost
2,323
—
2,323
Currency effects from conversion into USD
(777)
347
(430)
Included in OCI:
Return on plan assets
(429)
(429)
Actuarial losses
(414)
—
(414)
Other:
Contributions paid by the employer
—
—
—
Benefits paid
(111)
—
(111)
December 31, 2021
9,974
(4,354)
5,620
The primary assumptions made in calculating the defined benefit obligation were as follows:
65
in thousands of U.S. dollars
2022
2021
Discount rate
3.36%
0.79%
Employee turnover
5.00%
5.00%
Social security costs
47.00%
47.00%
The discount rate used is calculated by reference to
marked yields on high quality corporate bonds. Future
salary growth is assumed to be 1.0% higher than
inflation (December 31, 2021: 0.5% lower). Assumptions
regarding future mortality have been based on
published statistics and mortality tables.
Past service cost adjustments in the previous financial
year related to amendments to a plan curtailment at
X‑FAB France initially recorded in 2020 for which
estimates were revised following implementation of
the restructuring plan in 2021.
The Group expects to pay no contributions to the
funding plan in 2022.
Reasonably possible changes at December 31, 2022,
and December 31, 2021 to one of the actuarial
assumptions, holding other assumptions constant,
would have affected the defined benefit obligation
changing the discounted amounts of the net liability by
the amounts shown below:
in
thousands
of U.S.
dollars
Increase
at
Dec. 31,
2022
Decrease
at
Dec. 31,
2022
Increase
at
Dec. 31,
2021
Decrease
at
Dec. 31,
2021
Discount
rate (+0.25%
movement)
—
124
—
166
Future
salary
growth
(+0.25%
movement)
132
—
167
—
The defined benefit obligation is not materially
sensitive to a reasonable potential change in the
assumed mortality rate.
7.12 Trade payables and other current liabilities
Trade payables are non-interest bearing and are
normally settled on 60-day terms. Trade payables
have been increased from USD 41,364 thousand at
December 31, 2021, to USD 53,654 thousand at
December 31, 2022. This increase was influenced by
the general increase of business and increases in
investments in property, plant, and equipment.
Other current liabilities comprise the following:
in thousands of U.S. dollars
2022
2021
Accrued liabilities
31,464
17,521
For invoices not yet
received
29,280
15,850
Royalties
419
376
Sales commissions
349
307
Staff association costs
691
602
Other
725
386
Advances received
31,127
19,193
Deferred income
298
293
Employee-related
liabilities
24,958
23,879
Wages
2,992
2,931
Earned holiday
entitlement, incentives
15,556
12,469
Payroll taxes
2,377
3,870
Social security costs
4,033
4,609
Other
(4)
—
Total
87,843
60,886
Liabilities for social security costs at December 31,
2022, and December 31, 2021, include deferred
payments of amounts due by X-FAB France in
accordance with the terms of a government support
scheme to alleviate the economic effects of the
Covid-19 pandemic. Advances received relate to
prepayments from customers for future wafer sales. In
2022, advances received additionally include USD 10.8
million capacity reservation deposits from long-term
agreements concluded with customers in 2022.
7.13 Provisions
Provisions comprise the following:
in thousands of U.S. dollars
2022
2021
Current provisions
7,413
4,445
Non-current provisions
56
66
Total
7,469
4,511
Current provisions primarily relate to warranty costs.
Warranty provisions are estimated based on the
Group’s experience of past claim rates and knowledge
of current claims together with an assessment of
rectification costs. Increased business resulted in an
increase in warranty provisions in the financial year..
Non-current provisions refer to anniversary bonuses
for employees accounted for in accordance with
IAS 19, which include estimates of future staff turnover,
based on the Group’s experience of staff turnover
rates in recent years.
Annual Report 2022 | X-FAB consolidated financial statements
66
The unused amounts of a restructuring provision
initially recognized in 2020 amounting to USD 3,312
thousand were offset against general and
administration expenses following implementation of
the plan in 2021.
The movements on provisions during the year were as
follows:
in
thousands
of U.S.
dollars
Warranty
provisions
Employee
provisions
Restruct-
uring
cost
Total
January 1,
2022
3,691
820
—
4,511
Provided
for
5,471
23
—
5,494
Utilized
(2,073)
(179)
—
(2,252)
Released
(181)
(3)
—
(184)
Effect of
changes in
exchange
rates
(54)
(45)
—
(99)
December
31, 2022
6,854
616
—
7,470
in
thousands
of U.S.
dollars
Warranty
provisions
Employee
provisions
Restruct-
uring
costs
Total
January 1,
2021
2,541
1,412
5,722
9,675
Provided
for
2,176
17
—
2,193
Utilized
(979)
(571)
(2,023)
(3,573)
Released
—
(69)
(3,312)
(3,381)
Effect of
changes in
exchange
rates
(47)
31
(387)
(403)
December
31, 2021
3,691
820
—
4,511
8 Notes to the statement of cash flows
The change in trade payables in working capital
excludes changes in the amounts of outstanding
liabilities for additions to property, plant, and
equipment, as payments for additions to fixed assets
are recorded in the statement of cash flows when
payment is made.
Non-cash transactions primarily include the effects
from exchange rate differences, allowances on trade
receivables and increases in provisions.
The difference between the cash outflows for
investments and the additions to property, plant, and
equipment is primarily due to the level of outstanding
invoices for additions recorded at the end of the
financial year.
The Group entered into one sale and leaseback
transaction for property, plant, and equipment in 2021.
The cash inflow from that transaction was received in
2022 and amounted to USD 7,723 thousand.
9 Segment reporting
Operating segment
The Group manages its CMOS and MEMS operations
as one single operating segment. Operating decisions
are taken on a product and technology level by the
President and Chief Executive Officer, who is assisted
by the parent company’s management team.
Accordingly, X-FAB has identified its President and
CEO as its chief operating decision maker for the
purposes of defining segments in accordance with
IFRS 8. No separate operating results for the CMOS
and MEMS operations are used by the chief operating
decision maker to manage X-FAB’s operations, assess
performance, or make resource allocation decisions. As
a result, X-FAB has determined that its operations
constitute one single segment.
Geographic concentrations
The following table shows an analysis of revenue
(based on the customer’s billing location) and non-
current assets by geographic area for the reporting
period.
67
Revenue by geographic area:
in thousands of U.S. dollars
2022
2021
Europe
454,197
403,201
Belgium
294,400
256,258
Germany
72,794
70,245
United Kingdom
42,117
37,028
Austria
11,007
10,837
France
8,022
7,240
Switzerland
7,918
7,380
Sweden
5,215
3,752
Denmark
3,090
2,990
Other
3,179
2,585
Finland
2,384
1,743
Netherlands
2,629
1,689
Ireland
1,442
1,454
Asia
174,947
149,736
China
55,084
44,916
Japan
28,582
24,815
Malaysia
20,055
17,893
Singapore
18,225
16,743
Thailand
14,556
10,123
Taiwan
12,232
10,067
Hong Kong
12,029
5,667
Korea
9,648
15,302
New Zealand
3,420
3,060
Other
1,116
1,150
United States of America
106,725
102,189
Rest of the world
3,600
2,625
Total
739,469
657,751
Non-current assets by geographic area:
in thousands of U.S. dollars
2022
2021
Malaysia
187,265
156,660
Germany
151,114
133,482
France
114,289
66,491
United States of America
89,388
42,054
Total
542,056
398,687
Significant customers
The Group has one (2021: one) customer whose
revenues exceeded 10% of the Group’s consolidated
external revenues. The total revenue from this
customer, which is a related party (see note 12),
amounted to USD 293,014 thousand in 2022 (2021:
USD 254,362).
Annual Report 2022 | X-FAB consolidated financial statements
68
10 Financial instruments – fair values and risk management
Accounting classifications and fair values
The following tables show the carrying amounts and fair values of financial assets and financial liabilities measured
at fair value through profit or loss and measured at amortized cost, respectively, including their levels in the fair
value hierarchy.
December 31, 2022
in thousands of U.S. dollars
Carrying
amount
Fair value
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at amortized cost
Trade and other receivables
73,116
Cash and cash equivalents
369,425
Financial liabilities measured at amortized
cost
Trade payables
(53,654)
Bank loans, overdrafts, and lease liabilities
(296,945)
(296,950)
(296,950)
December 31, 2021
Financial assets measured at amortized cost
Trade and other receivables
73,689
Cash and cash equivalents
290,187
Financial liabilities measured at amortized
cost
Trade payables
(41,364)
Bank loans, overdrafts, and lease liabilities
(127,030)
(127,223)
(127,223)
Financial instruments measured at amortized cost
The carrying amount of cash and cash equivalents,
bank overdrafts, trade and other receivables, and trade
payables approximates their fair value due to the
short-term maturity of these financial instruments.
The fair value of the Group’s non-current liabilities is
based on their present values calculated by
discounting future cash flows at current rates of
interest available for debt with the same maturity
profile.
The Group’s principal financial instruments not carried
at fair value are cash and cash equivalents, trade
receivables, other current assets, other non-current
assets, trade and other payables, bank overdrafts, and
long-term borrowings.
There have been no transfers of assets or liabilities
between levels of the fair value hierarchy in the current
or previous year.
Financial assets and liabilities accounted for at fair
value through profit or loss
The Group held no financial instruments measured at
fair value through profit or loss in the current or
previous financial year.
The Group held no forward foreign exchange
contracts or interest rate swaps in the current or
previous financial year.
Financial assets and liabilities accounted for at fair
value through other comprehensive income
The Group held no financial assets and liabilities
accounted for at fair value through other
comprehensive income in the current or previous
financial year.
Management of risks arising from financial
instruments
The X-FAB SE Group’s principal financial liabilities
comprise bank loans and bank overdrafts, and trade
payables. The main purpose of these financial liabilities
is to finance the Group’s operations. The Group has
various financial assets, such as trade receivables and
cash and short-term deposits, which arise directly from
its operations.
Financial assets in the form of free short-term cash
available are placed on deposit with banks with a high
credit rating.
Deliveries made by the Group are subject to the
reservation of proprietary rights until the customer has
paid for the goods. Generally, further security is not
obtained.
69
While the Group did not hold any derivative financial
instruments in the current or previous year, it does,
from time to time, enter into derivative financial
instruments to manage the foreign exchange risks and
interest rate arising from the Group’s sources of
finance where the risks of financial loss or the liquidity
risk appears excessive. Such transactions are
exclusively entered into to reduce the risk of
contractually agreed or highly probable transactions.
These transactions are classified as FVTPL for
accounting purposes because the Group does not
formally account for them using hedge accounting
techniques.
The primary risks arising from the Group’s financial
instruments are market risks (interest rate and foreign
currency risks), credit risk, and liquidity risk. The Board
of Directors reviews and agrees policies for managing
each of these risks. The primary objective in managing
these risks is to minimize the risk of financial loss and
the risk of any interference with the Group’s ability to
pursue its commercial objectives. The policies followed
in respect of each risk are summarized below.
Interest rate risk
The X-FAB SE Group’s exposure to the risk of changes
in market interest rates relates primarily to the Group’s
long-term debt obligations with floating interest rates.
The Group’s policy is to manage its interest cost using
a mix of fixed and variable rate debts. To manage this,
the Group might enter into interest rate swaps, in which
the Group agrees to exchange, at specified intervals,
the difference between fixed and variable rate interest
amounts calculated by reference to an agreed-upon
notional principal amount. At December 31, 2022
approximately 32% of the Group’s borrowings
(excluding financial leases) are at a fixed rate of
interest (December 31, 2021: 42%). Accordingly, the
Group’s exposure to interest rate risk is limited.
Foreign currency risk
The Group’s statement of financial position can be
affected by changes in the dollar exchange rates, in
particular movements against the euro (EUR) and the
Malaysian ringgit (MYR). This risk mainly relates to
transactions in foreign currency.
The following tables provide an analysis of monetary
assets and liabilities by currency denomination,
expressed in thousands of USD:
Assets and liabilities denominated in EUR:
in thousands of U.S. dollars
2022
2021
Assets
Trade accounts receivable
15,342
25,603
Other assets
34,521
19,145
Cash
180,284
103,702
Liabilities
Trade payables
13,625
11,411
Loans and borrowings
144,903
75,399
Other liabilities and
provisions
39,479
33,521
Assets and liabilities denominated in MYR:
in thousands of U.S. dollars
2022
2021
Assets
Trade accounts receivable
44
49
Other assets
5,813
5,972
Cash
14,839
70,419
Liabilities
Trade payables
269
330
Loans and borrowings
6,203
7,110
Other liabilities and
provisions
882
—
The Group’s policy is to manage selected foreign
currency exchange risk by entering into forward rate
currency purchase or sale transactions (currency
forwards) for specific amounts of foreign currencies in
anticipation of transactions which are contractually
fixed or highly probable.
The following exchange rates were used in preparing
the consolidated financial statements:
2022
2021
USD/EUR
Closing rate
0.937
0.885
Average rate
0.948
0.845
USD/MYR
Closing rate
4.405
4.182
Average rate
4.398
4.144
The Group also has currency exposures arising from
sales or purchases made when operating units
undertake transactions in currencies other than their
functional currencies.
Approximately 42% (2021: 37%) of the Group’s sales
and 40,2% (2021: 47%) of the Group’s costs are
denominated in currencies other than the functional
currency of the operating unit making the sales.
Annual Report 2022 | X-FAB consolidated financial statements
70
The following table demonstrates the sensitivity to
changes in fair value of monetary assets and liabilities
on the Group’s profit before tax to reasonably possible
changes in the USD/EUR and USD/MYR exchange
rates, with all other variables held constant and
excluding effects of foreign exchange related
derivatives held. We have also assessed that the
sensitivity to changes in fair value of monetary assets
and liabilities to profit before tax is a good
approximation of the effect on equity of the Group as
the associated tax effect would not be significant.
USD/EUR
Increase/
(decrease)
in EUR rate
Effect on
profit
before tax
2022
5%
1,607
-5%
(1,607)
2021
5%
1,404
-5%
(1,404)
USD/MYR
Increase/
(decrease)
in MYR rate
Effect on
profit
before tax
2022
20%
2,669
-20%
(2,669)
2021
20%
13,800
-20%
(13,800)
The Group believes that a reasonably possible change
of other exchange rates, with all other variables held
constant, will not have a significant effect on the
Group’s profit before tax and on the Group’s equity.
The currency risk from translating foreign entities with
a functional currency that is different from the
presentation currency can be considered to be
immaterial as it relates to non-significant entities.
Credit risk
The Group’s primary risk credit risk concentrations
affecting financial assets are in respect of trade
receivables (described in note 7.4), balances with
related parties (note 12), and balances and short-term
deposits at banks (note 7.6).
The Group only trades with recognized, creditworthy
third parties. It is the Group’s policy that all customers
who wish to trade on credit terms are subject to credit
verification procedures. In addition, receivables
balances are monitored on an ongoing basis to ensure
that the Group is not exposed to significant risk of
credit loss. The maximum exposure is represented by
the carrying amounts disclosed in notes 7.4 and 7.5.
With respect to credit risk arising from financial assets,
including cash and cash equivalents, the Group’s
maximum exposure to credit risk arising from default
of the counterparty is equal to their carrying amounts
in the statement of financial position.
The Group has not recorded any expected credit
losses for cash and cash equivalents as it considers that
any measurement of the 12-month expected loss
would be an insignificant amount given the good credit
rating of the respective banks.
Liquidity risk
The Group monitors its risk of a shortage of funds and
of difficulties in meeting obligations associated with
financial liabilities. The Group’s objective is to maintain
a balance between continuity of funding and flexibility
through the use of bank loans, bank overdrafts, and
other financial instruments. Based on the positive cash
flow projections and the excess of current assets over
current liabilities, there was no significant liquidity risk
at December 31, 2022, or December 31, 2021. The
expected cash inflows from trade and other
receivables maturing within two months total
USD 73,116 thousand (December 31, 2021: USD 73,689
thousand). Trade accounts payables are due within the
next 12 months. An analysis of the maturity of financial
liabilities and available credit lines is presented in note
7.10.
Capital management
The primary objective of the Group’s capital
management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to
support its business and maximize shareholder value.
Further, management aims to maintain a stable level of
cash balances available for ready use at all times and to
at least maintain, or increase, the available cash at the
current level and to ensure that it meets financial
covenants attached to the interest-bearing loans and
borrowings. These goals can be achieved by a
combination of cash inflows and the use of new
external new financing arrangements. The Group
manages its capital structure (consisting of equity and
borrowings) and makes adjustments to it in light of
changes in economic conditions. To adjust its capital
structure, the Group may choose to take measures
such as making payments to or adjusting dividend
payments made to shareholders, returning capital to
shareholders, or raising new capital by issuing new
shares or adjusting its borrowing levels. No change was
made to the Group’s capital management objectives,
policies, or processes during the years ended
December 31, 2022, and December 31, 2021.
The EUR 200,000,000 multicurrency revolving credit
facility is available to the parent company and its
primary subsidiaries for use for euro and U.S. dollar
capital expenditures, general working capital
requirements and general corporate purposes
(including acquisitions). The facility contains a
covenant stating that the borrower shall ensure that
the ratio of total net indebtedness (the sum of all
borrowing and guarantee obligations of a financial
nature, defined more closely in the facility agreement)
cannot exceed 3.5 times its EBITDA, otherwise the loan
will be repayable on demand. The Group was in
compliance with this covenant at December 31, 2022.
71
The X-FAB SE Group’s other bank loan agreements do
not include requirements to comply with externally
imposed capital requirements, for example
requirements to meet specific equity and free cash
flow ratios.
The EUR 200,000,000 multicurrency revolving credit
facility and other bank loan agreements contain certain
other covenants typical for such borrowing
arrangements which impose a number of requirements
on the borrower, including, among other things, early
termination and set-off of asset balances against
matured obligations balances in case of a material
event of default, negative pledge clauses, obligations
to provide certain information relating to the financial
condition of the borrower, and change of control
provisions. Early repayments of amounts borrowed
may be demanded or offset against asset balances
and renewals or drawdowns of additional tranches
under credit arrangements may not be available if
there is an event of default or should the Group fail to
meet its other obligations under such terms and
conditions. Further, the Company has entered into
undertakings under the terms of certain credit
agreements to maintain its existing equity percentage
in the share capital and related percentage of voting
rights of its respective subsidiaries.
11 Leases
The Group has various lease arrangements for the use
of commercial properties, infrastructure, and technical
equipment and machinery. The arrangements run for
various periods until 2034 and carry interest rates
between 0.02% and 4.66% (December 31, 2021: 0.02%
and 4.46%). The contractual arrangements vary from
lease to lease. Some of these arrangements include
purchase options at a price that is lower than the
expected fair value of the assets at the end of the
lease period, so that the Group expects that these will
be acquired at a later date. Other leases are for a fixed
period of time and are renewed unless canceled by
either party, or include lease period extension options
exercisable by the Group.
In 2021 the Group entered into a sale and leaseback
transaction under which machinery was sold at book
value and leased back. The contractual arrangements
include a purchase option at a price that is lower than
the fair value and the lease term is for the major part of
the economic life. The Group continues to be able to
direct the use of the assets and obtain substantially all
of the remaining benefits from their use. Accordingly,
the transaction is wholly recognized as a financing
arrangement, and no sale or gain or loss is recognized
on the transaction. The assets were not derecognized.
The lease period runs until 2028 and carries an interest
rate of 1.26%.
The carrying values of right-of-use assets presented
as property, plant, and equipment were as follows:
in thousands of U.S. dollars
2022
2021
Net book value January 1
24,415
25,278
Additions
1,923
2,316
Depreciation
(4,373)
(4,339)
Disposals
—
—
Reclassifications
(527)
1,160
Net book value December 31
21,438
24,415
For lease arrangements which include extension
options exercisable by the Group, the Group assesses,
at the commencement of the lease, whether it is
reasonably certain to exercise the extension options.
The Group makes subsequent reassessments of
whether it is reasonably certain to exercise such
options if there is a significant event or significant
changes in circumstances which are within its control.
Should the Group exercise the extension options, the
future cash outflows under leasing arrangements, the
right-of-use assets recognized, and the commitments
under the lease liabilities would be increased. The
Group does not make estimates of such potential
increases as the most significant extension options are
at future dates and the amounts and available
operational alternatives may change. The overall level
of right-of-use assets and leasing obligations are,
however, unlikely to change by material amounts.
The future minimum lease payments due in respect of lease liabilities are as follows:
in thousands of U.S. dollars
2022
2021
Minimum
leasing
payment
Present value
Minimum
leasing
payment
Present value
2023
6,050
5,506
2024–2026
22,865
21,003
2022
6,015
5,380
2023–2025
27,062
24,877
Total
28,915
26,509
33,077
30,257
Interest
(2,407)
(2,407)
(2,821)
(2,821)
Liability
26,508
24,102
30,256
27,436
Annual Report 2022 | X-FAB consolidated financial statements
72
The minimum leasing payments disclosed for the
previous year have been amended to include certain
amounts previously omitted from future interest
charges. The amendments have no effect on the
results of operations or on the carrying amounts
reported in the statement of financial position.
Expenses relating to short-term leases amounted to
USD 646 thousand (2021: USD 616 thousand) and
expenses relating to leases of low-value assets
(excluding short-term leases of low-value assets)
amounted to USD 22 thousand (2021: USD 18
thousand).
12 Transactions with related parties
Transactions with shareholders and their
subsidiaries
As part of its normal business activities, X-FAB SE
Group undertakes transactions with entities in the
XTRION Group, a group of companies controlled by
XTRION NV, the ultimate parent company and the
largest shareholder of X-FAB SE. These include the
purchase of certain work in process and services, as
well as the sale of products and provision of services to
these companies. XTRION NV is also the parent
company of Melexis NV, which develops, designs, and
sells integrated circuits to customers such as the
automotive industry. The main wafer suppliers for the
Melexis Group are X-FAB SE’s subsidiaries. The
Melexis Group also provides final test services as well
as design support to X-FAB SE subsidiaries. Refer also
to the corporate governance statement. Conditions of
the commercial relations between X-FAB and its
related parties are in line with those that have been
agreed upon between independent parties in
comparable circumstances.
The tables below show the balances with shareholders
and their subsidiaries included in the statement of
financial position.
in thousands of U.S. dollars
2022
2021
Trade accounts receivable
due from Melexis group
companies
27,241
22,224
Trade accounts receivable
due from M-MOS group
companies
2,905
2,961
Trade accounts receivable
due from X-Celeprint
34
32
Trade accounts receivable
due from X Display Company
Technology
34
—
Total
30,214
25,217
in thousands of U.S. dollars
2022
2021
Advances received from
Melexis group companies
3,833
9,101
Advances received from M-
MOS group companies
3,827
—
Trade accounts payable due
to Melexis group companies
132
178
Trade accounts payable due
to M-MOS group companies
22
59
Trade accounts payable due
to XTRION
26
21
Trade accounts payable due
to Sensinnovat
118
96
Other
18
22
Total
7,976
9,477
Receivables from related parties relate to trade
receivables, do not carry interest, and are payable on
normal credit terms. As described in detail in note 7.4, a
settlement arrangement was entered into in 2021 with
a related party customer, concerning outstanding
receivables in excess of 360 days overdue totaling
USD 1,277 thousand. Impairment allowances of
USD 848 thousand had been recorded in 2020 against
these balances. Under this arrangement the Group
received intellectual property, which had been
provided by the customer as collateral security, which
the Group valued at USD 484 in settlement of the
outstanding liability.
Sales made to XTRION group companies primarily
include the supply of PCM-tested wafers and NRE on
the basis of wafer supply agreements made between
the parties.
Other income results from the provision of technical
facilities, supplies, utilities, property rentals, and
services provided. Services provided include
information technology, personnel, and legal support
services. For services provided, charges are made in
relation to the costs incurred based on an agreed
formula which considers the use of facilities, employee
time spent, and specific transaction details. Interest
income and expenses arose in connection with loan
arrangements.
73
Sales and other income comprise the following:
in thousands of U.S. dollars
2022
2021
Sales to Melexis group
companies
293,014
254,362
Sales to M-MOS group
companies
18,940
16,386
Sales to Anvo-Systems
—
50
Sales to X-Celeprint
—
—
Sales to X Display Company
Technology
359
297
Property rental and other
income from Melexis group
companies
2,080
2,211
Other income from M-MOS
39
122
Total
314,432
273,428
Property rental and other income from Melexis group
companies includes rentals and charges for technical
services included in the amounts described in note 6.7
as well as other items classified in other positions in the
consolidated statement of income.
Purchases, expenses, and other transactions recorded
with shareholders and their subsidiaries were as follows:
in thousands of U.S. dollars
2022
2021
Services provided by Melexis
group companies
413
533
Services/purchases provided
by M-MOS group companies
18
400
Services provided by           
X-Celeprint
—
8
Services purchased from
Sensinnovat
477
302
Services purchased from
ESA
202
159
Warranty cost Melexis group
2,724
2,036
Services provided from
XTRION
87
—
Services provided by
XTRION
3,921
3,438
Services purchased from member companies of the
XTRION group primarily included wafer test and final
test services. Outstanding balances from sales and
purchases of goods and from receiving and rendering
of services at the reporting date are unsecured,
interest free, and settled in cash. There have been no
guarantees provided or received for any related party
receivables or payables.
Remuneration of persons with key management
positions
in thousands of U.S. dollars
2022
2021
Short-term employee
benefits
1,297
1,302
Short-term employee
benefits for members of
management that are not on
the payroll of the Company
(CEO and CFO)
679
655
Directors’ compensation
231
205
Total
2,207
2,162
The persons with key management positions as
referred above as of December 31, 2022, include the
Group’s CEO, CTO, CFO, the CEO of X-FAB Dresden,
the CEO of X-FAB Sarawak, the CEO of X‑FAB Texas,
the CEO of X-FAB Erfurt and the CEO of X-FAB
France.
The Group has made contributions to defined
contribution pension plans for the benefit of persons
with key management positions totaling USD 101
thousand (2021: USD 79 thousand). Contributions to
defined contribution plans primarily comprise statutory
contributions to be made by employers to state-based
defined contribution plans. In connection with these
plans there are no minimum guarantees by the
employer. The defined contribution is based on a fixed
percentage of the (capped) gross salary determined
by state laws.
13 Other disclosures
13.1 Purchase commitments and contingencies
Purchase commitments comprise the following at
December 31:
in thousands of U.S. dollars
2022
2021
Purchase commitments
for:
Property, plant, and
equipment
334,217
67,621
Intangible assets
2,400
383
Material and services
39,865
9,512
Total
376,482
77,516
Purchase commitments mainly refer to purchase
orders placed for investments in technical machinery
Commitments concerning investment grants and
subsidies received
Various Group entities receive grants and subsidies in
connection with the acquisition of certain qualifying
assets (asset-related grants and subsidies) and
subsidies to offset research and development costs
(income-related grants). No material amounts of other
government assistance are received.
Annual Report 2022 | X-FAB consolidated financial statements
74
Specifically, XMF and X-FAB Dresden receive grants
and subsidies in connection with the acquisition of
certain qualifying assets (asset-related grants and
subsidies). The grant rules require that the assets on
which investment grants have been received are
retained for a period of five years (the subsidy rules,
which largely apply to the same assets, have a similar
three-year retention requirement) and that specified
employee levels are maintained at specific locations. If
it is not possible to fulfill these conditions, the grants
and subsidies may be partially repayable. The total
amount of grants and subsidies received in the past
(and thus deducted from the carrying amounts of the
assets) on property, plant, and equipment amounted
to USD 137.5 million (December 31, 2021: USD 136.1
million); the retention requirements have not yet been
fulfilled in full for grants and subsidies received totaling
USD 12.2 million included in that total.
13.2 Unresolved legal disputes and claims
The Group is not aware of any unresolved legal
disputes, claims or proceedings which could have a
significant financial impact on the Group.
13.3 Employees
The average number of employees employed by the
Group during the year was as follows:
2022
2021
Production
3,568
3,318
Research and development
310
305
Sales, marketing, and
administration
290
264
Trainees
117
102
Total
4,285
3,989
The total number of employees employed by the
Group at December 31 was as follows:
2022
2021
Production
3,662
3,430
Research and development
319
305
Sales, marketing, and
administration
299
270
Trainees
131
118
Total
4,411
4,123
Note: Number of employees excludes contract workers
(borrowed)
13.4 List of shareholdings
Entity
Place of incorporation
Principal activities
Shareholding in %
X-FAB Silicon Foundries SE
Tessenderlo, Belgium
Holding company
X-FAB Semiconductor Foundries GmbH
Erfurt, Germany
Wafer manufacturing
100.00%
X-FAB Dresden GmbH & Co. KG
Dresden, Germany
Wafer manufacturing
100.00%
X-FAB Dresden Verwaltungs-GmbH
Dresden, Germany
No activity
100.00%
X-FAB Texas Inc.
Texas, USA
Wafer manufacturing
100.00%
X-FAB Sarawak Sdn. Bhd.
Kuching, Malaysia
Wafer manufacturing
100.00%
X-FAB France SAS
Corbeil-Essonnes, France
Wafer manufacturing
100.00%
X-FAB Japan KK
Yokohama, Japan
Trading company
100.00%
X-FAB MEMS Foundry GmbH
Erfurt, Germany
Wafer manufacturing
100.00%
OOO Microdesign
Voronesh, Russia
R&D, design
100.00%
X-FAB MEMS Foundry Itzehoe GmbH
Itzehoe, Germany
Wafer manufacturing
100.00%
X-FAB Global Services GmbH
Erfurt, Germany
R&D, administration
services
100.00%
75
13.5 Consolidated financial statements of the
ultimate parent
The parent of the Company is XTRION NV. Although
XTRION NV does not hold a majority of the Company’s
shares, it is the Company’s largest shareholder and has
a controlling interest given its dominant shareholding
position relative to the size and dispersion of other
shareholders.
The financial statements of the companies included in
the Group are also included in the consolidated
financial statements of XTRION NV. These can be
obtained on request from XTRION NV, Transportstraat
1, 3980 Tessenderlo, Belgium.
13.6 Auditor and auditor’s remuneration
During the general shareholders’ meeting on April 30,
2020, KPMG Bedrijfsrevisoren BV was reappointed as
the Company’s auditor for the years 2020, 2021, and
2022.
The auditor’s remuneration for the period was as
follows:
in thousands of U.S. dollars
2022
2021
Audit cost
KPMG
345
392
Other audit firms
105
61
Other services
KPMG
27
36
Total
477
489
14 Events after the reporting period
There have been no reportable events subsequent to
the balance sheet date.
Tessenderlo, March 23, 2023
Managing Director, CEO
Sensinnovat BV
Represented by Rudi De Winter
CEO
Annual Report 2022 | X-FAB consolidated financial statements
76
77
78
79
6. CORPORATE SOCIAL
RESPONSIBILITY AT X-FAB
6.1 Scope
This chapter documents X-FAB’s environmental and
social performance during the 2022 financial year. The
environmental and social performance figures
encompassed in this chapter have been prepared in
accordance with the Global Reporting Initiative (GRI)
Sustainability Reporting Standards (2016) core option.
During the materiality analysis and the review of the
GRI standards, the expectations and requirements of
external and internal stakeholders were evaluated. A
report is prepared to outline various topics with
regards to sustainability, respect for human rights,
personal and social matters, environmental matters,
anti-corruption and bribery, and the supply chain.
Additionally, there is information on cyber security at
X-FAB and a section on EU taxonomy and the
associated reporting requirements.
The report contains the core GRI indices as well as
standard disclosures on general characteristics of
X‑FAB as an organization. Some of these figures can
be found in other parts of the annual report. A table
identifying the location of key figures and statements
can be found on X-FAB’s website. Unless otherwise
specified, the disclosed information refers to the 2022
financial year. Where applicable, data were collected
and/or measured by X-FAB or obtained from external
sources, such as utility providers. Data compiled from
X-FAB sites were validated using internal procedures.
Therefore, the environmental and social information in
this report was not externally assured.
This chapter is structured according to the three key
areas of environment, social, and governance (ESG)
and is based on a broader understanding with respect
to external stakeholders.
Environmental
Social
Governance
Considers how X-FAB performs
as a steward of nature, e.g.
energy emissions and waste
management
Examines how X-FAB manages
its relationships with employees
and the community, e.g. health
and well-being, working
conditions, and social awareness
Deals with how X-FAB is
governed, e.g. governance
overview and supply chain
management. More information
in the Corporate Governance
Statement
Fig. 6.1: Environmental, social, and governance (ESG) topics
In general, the provided statements and figures are
valid for the entire organization. Site-specific
information is indicated where applicable. The report
covers all entities of X-FAB Silicon Foundries SE. Its
scope and boundary was confirmed by the X-FAB
Board.
X-FAB is fully engaged to be the foundry of choice for
the analog world by focusing on innovative solutions
and on the quality of products as well as services.
X‑FAB’s manufacturing excellence meets customer
expectations and enables long-lasting success for all
stakeholders.
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To exceed the expectations of its customers, X-FAB
practices a quality management system certified
according to IATF 16949:2016 and ISO 9001:2015.
ISO 9001 and IATF 16949
ISO 9001:2015 specifies the requirements for a
quality management system. It helps organizations
to ensure they meet the needs of customers and
other stakeholders while also respecting statutory
and regulatory requirements related to a product or
service. IATF 16949:2016 as a new automotive
standard for quality management systems is
implemented as a supplement to and in conjunction
with ISO 9001:2015. It specifies the requirements for
establishing, implementing, maintaining, and
continually improving a quality management system
in the automotive supply chain.
Furthermore, X-FAB assumes responsibility by seeking
an appropriate balance of interests between the
consequences of required business decisions and its
activities on economic, technological, social, and
environmental levels. To save natural resources and to
support the global reduction of CO2 emissions, X-FAB
operates an environmental, health and safety, and
energy management system that is certified according
to ISO 14001:2015 and ISO 50001:2018. Additionally,
X‑FAB is a member of the German Electrical and
Electronic Manufacturers association (ZVEl) and has
signed the ZVEI Code of Conduct.
ZVEI
The ZVEI (“Zentralverband Elektrotechnik- und
Elektronikindustrie e.V.”) is the representative of
the economic, technological, and environmental
interests of the German electrical industry. The
ZVEI has drawn up a Code of Conduct of its own,
governing corporate social responsibility. The ZVEI
Code of Conduct takes internationally established
benchmarks as its reference and covers all relevant
subjects.
X-FAB, as one of the largest specialty foundry groups,
is aware of its social responsibility derived from the
Company’s global business activities. X-FAB’s
company culture is based on universal ethical values
and principles, especially integrity, honesty, diversity,
respect of human dignity, openness, and non-
discrimination comprising religion, ideology, gender,
and ethnicity. X-FAB is also committed to promoting
those values wherever possible and across all parts of
the value chain.
In the year 2022 and to the best of X-FAB’s
knowledge, there has been no non-compliance of any
laws or regulations identified concerning the use and
provision of products and services related to
environmental laws and regulations. X-FAB fosters
partnerships and trustworthy interactions with its
supervisory authorities, its supply chain partners, and
its customers.
X-FAB also manufactures a large variety of products
with sustainable impact on mobility, healthcare, and the
energy sector. In particular, in the area of electrification
of cars and the usage of renewable energy, the
products manufactured at X-FAB play a vital part in
reducing CO2 emissions.
6.1.1  X-FAB’s key environmental, social, and
governance (ESG) goals
Sustainability has been a significant driver of X-FAB's
development activities for several years, as the
Company focuses not only on the broad range of its
products but also on various internal and external
activities. X-FAB's mission is to contribute to the social,
environmental, and economic development of the
countries and regions where it operates. In 2022, X-
FAB took significant steps towards corporate
sustainability by setting long-term key ESG objectives
and initiatives, as sustainability is a journey that X-FAB
is ever-more committed to.
These are the long-term key ESG objectives X-FAB
defined and committed to in 2022:
Fig. 6.2: X-FAB’s ESG objectives
Innovation goal
X-FAB supports its customers to develop medical
applications to meet the needs of a growing and aging
populations. We want to increase the use of X-FAB
technologies in medical applications and aim to grow
X-FAB’s medical business at an average annual growth
rate of 10% until 2030.
X-FAB recognizes the importance of environmental
protection for a sustainable future and supports its
customers in developing green technologies. Energy
efficiency can play a critical role in reducing
greenhouse gas emissions, conserving natural
resources, and promoting sustainable development
across a broad range of sectors, such as transportation,
industrial, or communication technology. Therefore, we
intend to increase the percentage of our technologies
that contribute to higher energy efficiency of the
products they are used for, from 38% of total revenue
in 2021 to 65% in 2030.
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Diversity and inclusion goal
X-FAB has made a commitment to enhancing diversity
and inclusion within the organization and has formed a
global Diversity Council comprised of members from
Germany, France, Malaysia, and the USA to support
these efforts. The Council meets regularly to focus on
particular topics and goals, with a specific emphasis on
increasing the percentage of women in the
organization. In the past four years, the percentage of
women at X-FAB has increased from 26% to 29%, and
the Company intends to continue this positive trend.
As part of its strategy, the Diversity Council has
established two objectives to achieve by 2023:
◦offer targeted training to managers
on diversity and inclusion; and
◦review and further improve equal treatment
policies across all sites.
Carbon footprint reduction goal
Reducing carbon emissions and other greenhouse
gases is an important step in mitigating climate change
and its negative effects on the environment. X‑FAB is
committed to exploring and implementing sustainable
measures to minimize its carbon footprint, and seeks to
actively reduce its direct CO2 emissions rather than
artificially improve the Company's CO2 balance by
purchasing carbon credits.
X-FAB has set a goal to reduce its carbon footprint,
measured in carbon emissions per stepped mask layer,
by 40% by 2030 compared to 2021. Major initiatives
involve shifting towards a low-carbon energy mix,
improving the energy efficiency of its equipment,
modernizing and extending gas abatements, and
adopting low-carbon transportation options.
Water consumption goal
Water consumption can have a significant impact on
the environment, including the depletion of freshwater
resources, water pollution, and damage to aquatic
ecosystems. By reducing water consumption,
companies can help to conserve this precious resource
and ensure that it is available for future
generations as well as minimize the impact on the
environment.
X-FAB aims to reduce water consumption per stepped
mask layer by 20% in 2030 compared to 2021. Major
initiatives include a water reduction program in
Operations as well as broad investments to increase
water reuse by recycling or reclaiming water at all
X‑FAB sites.
All targets are regularly reviewed and reported on
annually.
6.1.2  Stakeholder engagement
Effective communication and collaboration with
stakeholders are key to promote transparency, build
trust, and achieve long-term sustainable development.
X-FAB has identified the following stakeholders:
customers, employees, investors, suppliers, and local
communities. X-FAB utilizes different channels to
communicate and engage with all of them, including in-
person meetings, digital communication, and other
platforms. As the scarcity of skilled workers continued
in 2022, particular focus was set on communication
with existing employees and the external employment
market. X-FAB regularly takes into account feedback
from stakeholders to improve its reporting. Figure 6.3
shows the different channels X-FAB is using to
communicate about its activities.
Fig. 6.3: Stakeholder engagement
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82
Employee engagement
X-FAB continued its employer branding campaign with
various activities aimed at attracting new talents to
support future growth. These included, among other
things, a virtual 360° fab tour of the Dresden site and a
xfabulous-branded tram that is used in Erfurt as part of
the local transport network. At the same time various
initiatives targeted existing employees to increase their
commitment to X-FAB. Apart from a corporate benefit
program, a new video series with the title “Quarterly”
was launched. This regular video update addresses the
latest developments within X-FAB Group and also
provides insight into the work and topics of the
corporate management team. As it was possible to
meet in person again this year, several employee
events took place, such as the annual dinner at X-FAB
Sarawak, summer parties, after work parties, and the
Environmental, Health, and Safety (EHS) week.
Customer engagement
X-FAB engages with its customers on several levels
beyond daily business. In 2022, face-to-face events
finally returned, and X-FAB had a booth at several
conferences and exhibitions, including APEC, ChipEx,
and Electronica. X-FAB contributed to several events
by presenting, speaking or moderating forum
discussions. A special event was again held in 2022: the
X-FAB Technology Conference, which is an excellent
platform for invited customers and the X-FAB
technology team to discuss the latest technical
achievements and challenges, and to set the starting
point for the innovative products of tomorrow.
Another format for bringing customers and employees
together also continued in 2022: the popular "X-Snack"
event series, which took place at our Erfurt and
Dresden sites.
X-Snack provides employees of X-FAB the
opportunity to get to know our customers and learn
about innovative applications enabled by X-FAB
technology.
Local community engagement
X-FAB encourages its employees to engage in
volunteer activities that benefit local communities and
promotes collaboration and dialog. A particular focus is
on improving working conditions and promoting social
and environmental responsibility, thus contributing to
the well-being and long-term development of
societies. In January 2022, X-FAB Sarawak
participated in the CSR "The Gift of Giving:
Mangala Computer Charity Project" and donated
50 sets of refurbished computers to Maha Mangala
Charity of Malaysia (MMCOM). These computers will
be distributed to families in Kuching and rural areas in
two batches. With help from X-FAB’s procurement and
IT teams, X-FAB was able to donate a complete set of
desktops that come with a monitor, keyboard, and
mouse, plus a new webcam and speakers.
Fig. 6.4: Employees of X-FAB Sarawak handing over the
donated computers to the project team
At each site, X-FAB supports several activities of its
employees. In Itzehoe, X-FAB supported employees
who participated in a local run and in Lubbock
supported the donation campaign of the charity
United Way. In Dresden, X-FAB employees
participated in the initiative “Dresden is(s)t
bunt” (“Dresden is/eats colorful”), promoting diversity
in the local society.
Industry association engagement
X-FAB promotes state-of-the-art technologies and
their advancement through its involvement in
numerous industry associations and other
organizations.
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Industry associations
X-FAB is a member of or otherwise related to several industry associations as well as scientific, governmental,
and standardization organizations, including but not limited to:
A. Industry associations
•AENEAS – Association for European
Nanoelectronics Activities
•ACSIEL – Professional French organization for the
electronic field
•edaCentrum – Association for Electronic Design
Automation, Germany
•EPIC - European Photonics Industry Association
•ESIA – European Semiconductor Industry
Association
•FOA – Fab Owners Alliance
•Förderkreis Mikroelektronik (Society for the
Promotion of Microelectronics, Germany)
•GSA – Global Semiconductor Alliance
•Medicen – Medical Competitiveness Cluster, Paris
region
•Minalogic – Competitiveness cluster for digital
technologies in the Auvergne Rhone Alpes region in
France
•MSIA - Malaysia Semiconductor Industry
Association
•SECA – Sarawak Electronics and Supporting
Industries Companies Association, Malaysia
•SEMI – global industry association serving the
manufacturing supply chain for the micro- and
nanoelectronics industries
•SFAM – Semiconductor Fabrication Association of
Malaysia
•Silicon Saxony, Germany
•ZVEI – Zentralverband Elektrotechnik- und
Elektronikindustrie (Electrical Industry Association,
Germany)
B. Scientific organizations
•Curatorship in different Fraunhofer Institutes,
Germany
•IMMS Institut fur Mikroelektronik- und Mechatronik-
Systeme (IMMS Institute for Microelectronic and
Mechatronic Systems, Germany)
•C2N Center for Nanoscience and Nanotechnology
at the University Paris-Saclay
•Texas Tech University, Electrical Engineering
Industrial Advisory Board, and Dean's Council for the
College of Engineering
C. Governmental committees/organizations
•Mikroelektronik Strategiekreis (Microelectronics
strategy circle, Germany)
•Silicon Germany
D. Standardization organizations
•DKE – Deutsche Kommission Elektrotechnik
Elektronik Informationstechnik in DIN und VDE
(German Commission for Electrical Engineering,
Electronics, and Information Technology of DIN and
VDE)
6.1.3 Digital transformation
Digital transformation can play a crucial role in
achieving sustainability goals by providing new tools
and approaches to reduce resource use, minimize
waste, and increase production efficiency. Digital
transformation is the integration of process
improvement, and technology in all areas of X-FAB. In
2021 a dedicated department was established with the
goal to fundamentally change the way we work, how
we create customer value, and how we shape our
organizational culture. The initiatives that are part of
our digital strategy aim to strongly improve our
efficiency and customer satisfaction, and to contribute
to a great work environment. The overall goal is to
simplify and deliver connections across X-FAB, with
our customers and suppliers.
Five core focus areas of action have been defined and
are the heart of the Digital Transformation Strategy
2022–2026.
New work
X-FAB has implemented several initiatives to support
an efficient work environment. These initiatives include
the implementation of new and agile systems such as
global interoffice and hybrid collaboration tools, a
paperless office with automation of forms, a single
project management solution, and an employee app
for communication and services.
Fab efficiency
X-FAB has undertaken global initiatives to automate its
fabs and manufacturing processes, aimed at increasing
efficiency and productivity. These initiatives include
the implementation of various yield enhancement
tools, scheduling, and MES systems, as well as inter and
intra bay lot transport, equipment and warehousing
automation, virtual factory solutions, and energy
efficiency systems. Additionally, robotics has been
adopted in certain areas to further optimize operations
and reduce manual labor.
Through these automation efforts, X-FAB seeks to
improve quality and delivery, reduce cycle times, and
lower costs, while also minimizing its environmental
impact and enhancing the safety and well-being of its
employees.
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Data and AI
X-FAB has a long-term roadmap for implementing
next-generation data and AI initiatives, which includes a
range of projects and technologies. One initiative is
extending the Gravity and AIR projects globally, as part
of the focus on next-generation data and AI initiatives.
Some of the specific technologies involved in these
initiatives include R/Shiny, a software developer
community, and reporting and capacity planning
systems.
X-FAB is also exploring how AI and automation can
improve various processes, such as defect detection,
early fault detection, and maintenance prediction.
Customer transparency and quality
Through digitalization and automation, X-FAB is
enhancing its quality and customer transparency
processes. This includes initiatives such as B2B
integration, my X-FAB, error proofing, "poka yoke" and
failure prevention, and the use of AI for fast
abnormality recognition via data.
Business process optimization and RPA (robotic
process automation)
X-FAB has revised its business processes to identify
areas for lean and automation improvements. In line
with this objective, we have implemented a business
process automation platform and adopted a lean
approach across the organization. X-FAB has assessed
and implemented robotic process automation (RPA)
to improve manufacturing efficiency and reduce costs.
We have also standardized our processes to ensure
readiness for an enterprise resource planning (ERP)
upgrade.
Fig. 6.5: Focus areas of X-FAB’s digital transformation
strategy
6.2 Environment
X-FAB’s expertise in process technologies is used by
its customers to develop green technology for energy
solutions contributing to a sustainable future.
However, the production of high-quality microchips
and microsensors requires a huge amount of materials
and energy in general. Thus, X-FAB has a responsibility
regarding environmental topics. This is why, in addition
to the Company’s business, environmental activities
are handled with an integrated quality management
system with all sites being certified according to the
ISO 14001:2015 standard. It is X-FAB’s goal to balance
current environmental, social, and economic
requirements in order to minimize its impact on future
generations. One standard and permanent goal is to
fulfill all existing compliance obligations.
6.2.1 Environmental awareness and responsibility
In addition to the company values, X-FAB trains its
employees on various topics in order to increase
individual awareness for the Company’s environmental
impact as well as sustainability. All sites obey strict
environmental local laws .
X-FAB is committed to carbon footprint reduction of
40% and a reduction of water consumption per
stepped masked layer by 20% in 2030. The set targets,
both with reference to 2021, will be reviewed and
reported annually with site-specific goals to continually
reduce the Company’s impact on the environment.
Various environmental topics have been assigned to
dedicated employees within X-FAB to ensure these
environmental responsibilities in compliance with the
EHS policy following the requirements of ISO
14001:2015 are fully covered. The following functions
are defined: waste inspector, energy management
inspector, radiation and emission inspector, and safety
inspector. Employees taking over any of these roles
are trained accordingly.
The production of semiconductors requires the use of
large amounts of different materials, among them toxic
materials and greenhouse gases. Thus, tracking the
material flow and monitoring the material efficiency as
well as their use is necessary to reach sustained
environmental conservation. All X-FAB sites are
located in industrial areas. There are no adjacent nature
reserves or similarly classified areas so that the impact
on biodiversity is minimized.
For 2022, the data used for an overview of X-FAB’s
environmental indicators is consolidated across all sites
and normalized to wafer area sold in cm2 (total of
281.24 million cm2). X-FAB Itzehoe is not included as
the site is shared with third parties with only
aggregated data available. However, compared to all
other sites, the Group’s material and energy
consumption as well as the corresponding output of
waste and gases at that location are not material.
85
6.2.2 Materials and waste management
The need to use materials that might cause toxic waste
in the production of semiconductor products is a
special challenge and a key environmental aspect.
Therefore, material departments and waste
commissioners have been established at each X-FAB
site. The following materials are used for production:
solvents, photoresists, neutral etchants, acids and
bases, metals, gases, and water. Classifications are
used and waste is separated by X-FAB to reduce the
amount of hazardous or non-recyclable waste. The
majority of the waste (hazardous as well as
nonhazardous) is sent for recycling in order to recover
valuable resources.
The total waste disposal in 2022 is comparable to the
total waste in 2021 with a waste recovery of 84.1%
compared to 84.7% in 2021.
Fig. 6.6: Amount of waste by type and disposal method
normalized to the total wafer area sold (tons per million cm2
wafer sold)
X-FAB pursues permanent environmental objectives
to decrease its overall environmental impact. Some of
the activities carried out are:
•co-processing of fluoride sludge waste as raw
material at a cement plant instead of landfill
(Kuching); and
•reuse of wooden pallets for scheduled waste
storage instead of purchasing wooden pallets
(Kuching).
6.2.2.1 Energy efficiency
At X-FAB, energy is mainly used in the form of
electricity, whereas other sources play only a minor
role. The production department has the highest
energy consumption based on the advanced
cleanroom conditions as well as the production process
itself. In 2022, X-FAB’s global energy consumption was
at about 531 GWh, a slight increase due to the increase
in production equipment. The share of low-carbon
electricity power sources, such as hydro, nuclear, solar,
and wind, was at 72%, and the share of high-carbon
sources, such as oil, gas, coal, biofuel, etc., was at 28%.
The split for X-FAB Sarawak is based on data for 2021,
as it is the most recent data available from the local
electricity provider.
Fig. 6.7: Share of low-carbon and high-carbon electricity power
sources (in percent)
At the sites in Erfurt, Dresden, and Corbeil-Essonnes,
X-FAB has implemented an energy management
system according to the requirements of ISO
50001:2011.
ISO 50001
This international standard specifies requirements
for establishing, implementing, maintaining, and
improving an energy management system, the
purpose of which is to enable an organization to
follow a systematic approach in achieving continual
improvement of energy performance, including
energy efficiency, energy use, and consumption.
This enables the assessment of improvement
potentials of the Company’s energy efficiency and
their implementation in daily work. Across the
Company, different activities and projects exist to
reduce energy consumption, which are part of the
aforementioned annually renewed environmental
goals.
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X-FAB aims to improve its energy efficiency and
reduce energy consumption, and a range of activities
are being undertaken to achieve this, illustrated by the
following examples of projects completed during the
2022 financial year at the Group’s Lubbock facilities:
•replacement of 25-year-old cooling towers with an
estimated annual energy savings of 167,137 kWh;
•replacement of CDA (clean dry air) compressor
units to support current system for facility
expansion, which will lead to an estimated annual
electrical savings of 40 kW; and
•continuation of energy saving program launched in
2019 with the replacement of fans and variable
frequency drives.
Such environmental goals are communicated during
X‑FAB’s annual EHS week taking place at all sites.
Figure 6.8 shows the power consumed at all X-FAB
sites over the past three years. Data is not available for
Itzehoe for the entire period shown.
Fig. 6.8: Power consumption of all X-FAB sites from 2020 to
2022 (in GWh)
6.2.2.2 Water
In 2022, X-FAB’s production consumed roughly 17.1
liters of water per each cm2 wafer area sold. The
majority was used for cooling as well as for the supply
and cleaning of production tools. Different sources of
water supply are used, including surface water,
municipal water, and ground water. There is a slight
increase in consumption due to the higher production
volumes in 2022.
Amount in liter/cm2
From a river
1.62
Ground water
4.03
Local drinking water supplier (city
council)
11.42
Total water withdrawal
17.06
Fig. 6.9: Total water withdrawal by source
Fig. 6.10: Total water consumption (1,000 m3 per million cm2
wafer sold) over a three-year period
6.2.2.3 Greenhouse gases
Global climate change is an important challenge to all
industrial players worldwide. X-FAB understands the
climate impact from its operations on society and the
global economy. Nevertheless, the use of greenhouse
gases is inevitable for the production of microchips and
sensors. Figure 6.11 lists the 2022 total consumption of
these gases. For 2022, reporting values are now
reported in kilogram CO2 per million cm2 wafer sold.
Gas
Amount in kg
Amount in kg CO2
CF4
2,424
17,910
CHF3
230
3,401
SF6
174
3,959
NF3
119
2,054
C4F8
44
455
N2O
33,147
8,784
CH3F
42
4
C2F6
3,742
45,654
C5F8
50,498
101
CH2F2
3
2
C4F6
59,391
117
C3F8
7
59
Fig. 6.11: Gas emissions by weight
Fig. 6.12: Two-year comparison of PFC gas consumption (all
gases ≥1 ton CO2 per million cm2 wafer sold)
87
It is X-FAB’s intention to minimize the output of
greenhouse gases. Therefore, each production site is
equipped with state-of-the-art cleaning systems. The
functionality of these systems is tracked and linked to
the production equipment using greenhouse gases.
There are additional measures at every site to ensure
all regulations are followed. As a result, no significant
spills of hazardous substances and greenhouse gases
were found in the reporting period. Gas usage is
monitored to ensure no wastage is occurring.
There was a significant decrease in PFC gas
consumption in the last year due to replacements of
old technology systems and energy efficiency
programs; refer to 6.2.2.1 Energy efficiency. To further
decrease X-FAB’s impact on the environment the
corporate management board decided to reduce the
CO2 emission per stepped mask layer by 40% by 2030
compared to the 2021 level.
6.3 Social
6.3.1 Human rights and human resources
X-FAB’s company ethics are based on universally held
ethical values and principles, including respect of
human dignity, openness, and nondiscrimination
according to the ZVEI Code of Conduct.
Consequently, X-FAB stands up for human rights as
stated in the Charter of the United Nations, especially
the protection from harassment, the prohibition of
child and forced labor, the prohibition of discrimination,
fair working standards and compensation, and freedom
of thought, expression, association, and assembly, as
well as collective bargaining. Based on the principle
“freedom of association” 98% of our employees in
Europe are organized under the regulation of local and
national collective bargaining agreements. These
agreements give the highest level of transparency of
working conditions to all employees. In France and
Germany new collective bargaining agreements are
under negotiation and will be finalized and
implemented in 2023.
All operations are continually monitored and reviewed
regarding human rights. All of X-FAB’s investments are
in compliance with respective local laws. Additionally, a
specific policy exists addressing the sourcing of
conflict minerals which is further described in section
6.4.2.3 of this report. Respecting human rights is a
matter of course for X-FAB, and in all employment
contracts. Any kind of child and/or forced labor is
prohibited. Health and safety for all employees is
guaranteed. The protection from corporal punishment
as well as physical, sexual, psychological, or verbal
harassment and abuse is ensured.
Internal and external security personnel follow very
high standards of human rights practices. During the
selection process, they have to undergo special
screenings and have to provide special certifications
and qualification. They undergo specific training on
values, behavior standards, and policies of X-FAB.
X-FAB supports disabled or handicapped persons
according to local laws. At X-FAB’s workplace more
than 100 employees (officially registered with
disabilities) are well integrated into the daily work
processes and routines. Any form of discrimination is
strictly prohibited. All new employees who started in
2022 attended a mandatory employee orientation, of
which training on human rights policies is an important
focus. Relevant local laws together with company
handbooks are accessible to all employees on X-FAB’s
intranet as well as in printed form. This is implemented
by the Human Resources (HR) department, whose
members are regularly trained externally and internally
on human rights topics in more detail, such as inclusion,
diversity, and anti-discrimination.
Employees are encouraged to report incidents related
to human rights to the HR department or, where
available, the workers’ council and the equal
opportunities officer. No incidents were reported in
2022.
In the case of reported incidents, corrective actions are
initiated in consultation with the HR department and in
compliance with local laws. The identity and well-being
of employees who report on the violation of any law or
regulation of the Company, on any activities that are
against the interests of the Company, or on any matter
likely to harm any other person are protected by the
Company’s corresponding global procedure. X‑FAB
operates a no-retaliation policy for those individuals.
Employee statistics
At the end of 2022, X-FAB had around 4,350
employees worldwide at six different manufacturing
sites in Europe, Asia, and the US. At all of its sites,
X‑FAB’s recruitment policy is based on the employee’s
qualifications and the Company’s requirements.
Consequently, different requirement profiles exist in
technology and operations-related positions.
More than half of X-FAB’s staff is located in Europe.
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Location
Absolute # of
employees
Percentage of
male employees
[%]
Absolute # of
male employees
Absolute # of
female
employees
Percentage of
female
employees [%]
North America
508
70.5
358
150
29.5
Europe
2,490
75.1
1,871
619
24.9
Asia
1,373
65.0
893
480
35.0
TOTAL
4,371
71.4
3,122
1,249
28.6
Fig. 6.13: Number of employees (without trainees) by region and gender at the end of 2022
In line with the strong demand in semiconductors the
number of employees increased from 2021 to 2022 by
295. The growth in the number of full-time equivalent
employees (FTEs) was mainly driven by strong focus
on social media employer branding activities as well as
various other activities to hire qualified staff.
In particular, X-FAB is aiming to increase its share of
female employees. The share of female employees is
constantly increasing in all regions X-FAB is operating
in. It increased from 26% in 2018 to 29% in 2022 for the
entire Group.
Fig. 6.14: Share of male and female employees by region 2018–
2022
Employees’ rights and working standards are highly
valued at X-FAB. Consequently, all arrangements
comply with corresponding national laws and
requirements. X-FAB employees with a full-time
contract, which applies to 95% of all employees, work
between 35 and 40 hours per week. 94% of employees
hold a permanent employment contract. Less than 2%
of staff are contract workers.
In 2022 the number of part-time contracts increased
slightly, primarily attributable to an increase in part-
time male employees.
The full “Flex@work” policy was deployed at all X-FAB
locations, so that, where practical, employees were
able to work from home and were provided with the
technical requirements for remote work. With this full
flexibility X-FAB employees could adapt to the
different Covid-19 regulations in the countries X-FAB
operates in.
89
Location
Gender
Temporary/
fixed term
Permanent
employees
Contract
workers
Trainees/
internships
Full-time
Part-time
North America
Male
0
325
33
0
355
3
Female
0
118
32
0
149
1
Europe
Male
191
1,675
1
107
1,763
104
Female
52
571
0
25
492
131
Asia
Male
16
877
0
0
893
0
Female
18
462
0
0
480
0
TOTAL
Male
207
2,877
34
107
3,011
107
Female
70
1,151
32
25
1,121
132
Fig. 6.15: Employment contracts by type, region, and gender as at year end 2022
About 98% of all contracts in Europe are collective
bargaining contracts. In 2022 X-FAB started to
negotiate one common collective bargaining
agreement for all German sites. In other regions of the
world this concept is not common, and therefore, there
are no collective bargaining agreements in place.
In 2022, 821 new employees were hired, 71% of whom
were male and 29% were female. The majority of newly
hired employees are younger than 35 years. The
average 12-month turnover rate in 2022 was 5%, up
from 4% in the previous year.
Location
Gender
<35 yrs
36–50 yrs
51–60 yrs
> 60 yrs
Total
North America
Male
68
21
5
3
97
Female
38
15
3
0
56
Europe
Male
268
97
30
4
399
Female
81
31
11
0
123
Asia
Male
77
10
3
0
90
Female
53
3
0
0
56
TOTAL
Male
413
128
38
7
586
Female
172
49
14
0
235
Fig. 6.16: Newly hired employees (including contract workers, excluding trainees) by age and gender in 2022
Location
Gender
<35 yrs
36–50 yrs
51–60 yrs
> 60 yrs
Total
North America
Male
13
12
4
2
31
Female
6
2
0
1
9
Europe
Male
248
79
22
7
356
Female
69
21
8
1
99
Asia
Male
39
16
0
0
55
Female
13
2
0
0
15
TOTAL
Male
300
107
26
9
442
Female
88
25
8
2
123
Fig. 6.17: Number of employees (excluding trainees and retirements) who have left X-FAB in 2022 by age and gender
X-FAB conducts an employee engagement survey,
referred to as Barometer, on a regular basis. The
results of the most recent survey conducted in 2021
indicated some areas for improvement. In response,
X‑FAB management has established action teams on a
global as well as on local level. As a result, several
initiatives have been launched in the areas of training
and development, benefits, communication, and
leadership.
Average employee ages vary across the Group’s
locations, ranging from an average of 37 years in Asia
to an average of 44 years in North America. There was
an overall decrease in average age compared to 2021.
Location
Average
age of all
employees
Average
age of male
employees
Average
age of
female
employees
North America
44.0
45.0
42.0
Europe
42.3
42.2
42.1
Asia
37.2
38.4
34.9
TOTAL
41.2
41.9
39.7
Fig. 6.18: Average age by location and gender in 2022
X-FAB is aware of the importance of fair payment.
Therefore, all employees receive salaries above the
minimum wage according to individual qualification
irrespective of gender or age. Based on specific local
laws and regulations the relevant employees have the
opportunity to inform themselves about the equal pay
Annual Report 2022 | Corporate social responsibility at X-FAB
90
policy of X-FAB by benchmarking their payment
against a relevant group of employees. Of all
employees who were on parental leave, nearly 100%
returned to X-FAB.
Developing excellence
The success of a company, and thus also X-FAB,
depends on whether its employees are able to
optimally contribute their individual strengths, which
consequently need to be identified and individually
developed. The required expertise includes solid
knowledge and understanding of X-FAB’s internal
procedures and production processes as well as job-
specific knowledge, all of which are part of the
introductory training plan for each new employee.
In 2022 X-FAB introduced LinkedIn Learning licenses
to all employees for private and professional use. With
unrestricted access at any time, anywhere, employees
can benefit from the largest e-learning platform
worldwide. Based on the yearly training needs analysis,
specific training was recommended in the e-learning
system. For individuals who have no direct access to a
computer, X-FAB offers private areas with access to
undertake relevant training in each location.
To strengthen individual development and drive
performance improvement, in 2021 X-FAB introduced
a new performance management process (PMP) that
is based on constant feedback from supervisor to
employee on performance and goal achievement. The
newly introduced software, SAP SuccessFactors, helps
to track progress on an individual level. This
standardized global process allows X-FAB to ensure
that every employee is aware of his or her individual
goals as well as the goals of the department, the site,
and the Company. In 2022 a full year’s cycle was
completed and goal achievements were tracked and
stored in the new system.
For a high level of environmental and social awareness,
company values, quality awareness, and employee
rights are highlighted from the beginning of the
working relationship at X-FAB. In particular, e-learning
campaigns were tested in 2022 and will be further
rolled out in 2023.
Enabling employees to be promoted to positions with
either higher technical or staff responsibility requires
constant development in different areas. To ensure
global knowledge transfer and continual development
of all employees, internal workshops, training sessions,
Lunch & Learn sessions, knowledge networks, and
webinars on various technical topics are incorporated
into the daily work of every X-FAB employee. At the
beginning of the year training was held virtually, which
included internal as well as external training. In the
second half of 2022 more training was offered face to
face. In total, the amount of training hours increased
compared to 2021.
Location
Gender
<35 yrs
36–50
yrs
51–60
yrs
> 60 yrs
North
America
Male
24
24
24
12
Female
24
24
24
12
Europe
Male
37
36
28
28
Female
40
37
22
21
Asia
Male
21
16
17
0
Female
20
19
16
0
Fig. 6.19: Average training hours per year and employee in 2022
In 2022 X-FAB launched a new two-year education
program for professionals and talents from all X-FAB
sites designed to develop project management and
personal skills. This global talent development
program, referred to as ProMPT (Project Management
for Professionals and Talents), was first introduced in
2016 and concentrates on the areas “personality and
leadership,” “project management,” “quality
management,” “strategic thinking,” and “cultural
awareness.” In 2022, 15 employees from all X-FAB
locations were selected for a new round of the
program with the first training taking place in France
(Fig. 6.20). Alongside their training they worked on
several strategically important projects for the X-FAB
Group.
Fig. 6.20: Participants of the global PromPT team during the
training in France
To support the career of X-FAB’s technical experts
and to acknowledge that technical and management
expertise make contributions to the organization that
are equally important, X-FAB has established a system
of human capital management. An important part of
that is X-FAB’s Technical Ladder. It enables visionary
technical leadership and expertise, and supports
recruitment, individual development, and retention of
talented people in a competitive employment market,
acknowledging the highest levels of technical
expertise. In 2022 X-FAB promoted 17 technical
experts to a global grade on the Technical Ladder. This
not only shows that more and more of the Company’s
experts work on global projects it also stands for the
broad technical knowledge base X-FAB has.
91
To keep up with the fast development within the high
tech area, X-FAB supports innovation – being one of
the company values – and participates in publicly
funded projects. In those projects, X-FAB enables
technical experts to conduct research and to propel
state-of-the-art technologies by proving feasibility of
new concepts or the industrialization of innovative
process technologies. Innovation is appreciated by
X-FAB, and technical experts are explicitly invited and
encouraged to publish their findings in international
journals and to file patents. As at year end 2022
X-FAB’s overall patent portfolio amounts to more
than 450 patents and patent applications.
Besides the development of its existing staff, X-FAB is
highly interested in offering a wide range of
opportunities to potential future employees, for
example via apprenticeships, internships, and student
training. This comprises commercial and technical
careers, dual study programs, and financial support for
employees who enhance their skills and knowledge by
obtaining relevant qualifications.
X-FAB also offers dual study programs, which combine
theoretical sessions and practical work, allowing
students to integrate these skills into their future
working life from the beginning of their studies.
Apprenticeships offered by X-FAB to young talents
cover commercial as well as technical careers. In
Germany and France more than 130 apprentices are
currently undertaking their first, second, or third year of
VET (vocational and educational training).
In 2021, X-FAB rebranded its employer brand “We are
X-FABulous,” showcasing the experiences of real
employees in operator, engineering, and technician
roles, as well as interns or managers and experts. Over
the year 2022 site-specific advertisement campaigns
aimed at raising brand awareness in the public were
launched successfully at all locations. A specific
Instagram account with biweekly updates was launched
and each month employee-focused stories are posted
on the corporate LinkedIn account.
Rewarding efforts
As an international company, X-FAB employs people
from many different regions around the world with
different ethnic origins and social backgrounds,
resulting in a broad range of individual needs. Being
aware of those needs and driven by the responsibility
for the Company’s staff as well as the aim of long-term
employment, X-FAB strives to meet those needs.
Nowadays, the modern world demands a high level of
self-responsibility and flexibility, especially for working
parents and those with responsibilities for caring for
the elderly. Therefore, X-FAB offers flexible working
time models and strives to find individual working time
solutions for its employees. In particular, during the
pandemic, X-FAB offered a full “Flex@Work” approach
by offering mobile working wherever the tasks were
suitable for remote work.
X-FAB grants leisure time for private matters, such as
moving and marriage, and supports working parents
financially in case of their children’s illness. As part of
collective bargaining agreements, German employees
above a certain age are offered the possibility to
reduce their weekly working hours, if appropriate. The
flexibility to start and end the working day at variable
times at X-FAB’s Asian site was a benefit that was well
perceived to balance personal and private matters.
Moreover, X-FAB’s company pension scheme
supports its employees financially after their transition
to retirement. In 2022 a collective bargaining
agreement applicable to German employees was
introduced and more than 600 employees benefited
from a company pension scheme.
X-FAB cares about its employees’ increased health
awareness and growing interest in an active way of life.
X-FAB supports activities at its different sites to keep
the employees healthy, such as internal sport groups,
soccer teams, and running groups, or reduced pricing
for fitness clubs. Furthermore, a variety of fitness
activities and trial lessons as well as fitness and health
checks are offered to employees.
Work environment
X-FAB is interested in a good working atmosphere for
its employees and strives at providing a pleasant and
inspiring working environment. Cafeterias, lunchrooms,
and subsidized meals are offered to employees.
Furthermore, chill-out rooms and staff rooms with
journals, internet access, and free nonalcoholic drinks
are available to support employees during their work
breaks. In several locations the breakout rooms for
shift personnel have been updated and refurbished.
Fig. 6.21: New breakout room for shift personnel at the Erfurt
site
Even during significant pandemic restrictions, X-FAB
ensured that local cafeterias stayed open for the well-
being of the employees. During weekends as well as
night shifts X-FAB staff had the opportunity to use the
cafeteria and breakout rooms.
X-FAB rewards outstanding employee performance
with incentive cash payments during the year and in
the form of bonuses. Both individual employees and
teams who undertake extraordinary efforts for X‑FAB’s
benefit are acknowledged by the Company’s
corporate management.
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92
In 2022 each X-FAB employee was rewarded with an
extra bonus at the end of the year, honoring the
extraordinary efforts during the challenging year of
2022. In some countries special governmental
schemes were used to provide these bonuses under
special tax conditions.
6.3.2 Social commitment
X-FAB encourages its employees to engage in
nonprofit and educational activities that contribute to
the communities X-FAB is active in. In several sessions,
each employee is trained in the company values with
the implementation of those values in everyday work
life being recorded in a learning management system
(LMS) aiming at personal development. Eventually, this
leads to even more innovation and higher ethical
standards, which also has a positive impact outside the
working environment. In 2023 we plan to launch a
monthly campaign via the e-learning platform LinkedIn
Learning on IT security, lean principles, diversity and
inclusion, etc. to raise awareness of specific topics.
Social awareness and responsibility
X-FAB identified opportunities for global and local
activities that contribute to the communities in which
X-FAB is operating. X-FAB has also raised money to
support local programs as well as international charity
organizations, such as United Way Worldwide. In order
to support the people in Ukraine, X-FAB collected aid
supplies at several sites and furthermore donated
EUR 10,000 to an association of international and
German aid organizations, an alliance of "Bündnis
Entwicklung Hilft" (relief organizations alliance) and
"Aktion Deutschland Hilft" (Germany’s relief coalition).
In December 2022, X-FAB hosted its traditional
Christmas donation campaign. The beneficiary was
“Tafel” in Itzehoe, which is a local food bank and
provides food and essential goods for those in need.
X‑FAB donated USD 0.25 for each click on the
Company’s Christmas webpage. As a result, X-FAB was
able to hand over a check in the amount of EUR 2,500
as the campaign recorded 10,000 clicks in total.
Fig. 6.22: Handover of the check to the local food bank in
Itzehoe
Blood donation is one of the most important activities
for making a direct personal contribution. X-FAB
supports such collective efforts by organizing regular
blood donation campaigns several times a year. For
employees it is a matter of course to voluntarily
support the Red Cross through blood donation.
Due to the pandemic regulations all blood donations
were put on hold but will be activated as soon as it is
possible.
The site in Kuching launched a ”Show your care” charity
campaign to help their employee Mohn Zambri Apen
following a fire tragedy. The employees raised
MYR 5,500.
Fig. 6.23: Lee Boon Chun, CEO of X-FAB Sarawak, handing
over the donation to Mohn Zambri Apen
X-FAB also supports sports events with a charity
background by enabling its employees to attend these
events. This not only helps to increase team spirit but
also supports local organizations and sports clubs.
Fig. 6.24: X-FAB Itzehoe employees at a local run
Educational awareness and responsibility
It is important to X-FAB to invest in the education and
skill development of the young and children as the next
generation by sponsoring books and other educational
material to kindergartens, supporting lectures at
universities (e.g. providing design courses in
engineering schools), investing in education
competitions, and organizing summer schools
(“Microchip Summer University”). To provide
opportunities for practical training and work
experience in technical fields, X-FAB offers internships
to high school and university students and also offers
students company tours on request. In 2022 X-FAB
reactivated the international internship program to
invite students to undertake their practical training at
one of X-FAB’s sites.
93
Besides its sponsoring activities, X-FAB maintains close
relations with high schools, colleges, and universities to
support students by offering internships and career
guidance. X-FAB also works with local universities and
supported the SEMI High Tech University for high
school graduates considering a future career in a
science, technology, engineering, or mathematics
(STEM) field. In 2022 several activities were restarted.
Back in 2019, X-FAB France was the only French
semiconductor company invited to participate in a
Pan-European project, funded by the European
Commission, called METIS (microelectronics, training,
industry, skills). As part of the ERASMUS+ consortium,
which consists of over 30 participating parties from
industry, education, university, and training, X-FAB
actively contributes to the success of the program. In
2022 X-FAB continued to participate in several
activities within the program and will continue to work
in this project until 2024.
Various scientific and engineering competitions are
supported either by providing knowledge to the
participants or by serving as judges, e.g. at the student
robotics competition. X-FAB works with many global
and local partners to improve educational
opportunities for kids and the young, e.g. by supporting
corresponding technical clubs. Besides the educational
responsibility towards society, X-FAB cares about
gender equality and the development of girls in STEM
jobs. X-FAB actively contributed by sponsoring and
running STEM days for girls.
In 2022 X-FAB continued to used social media
channels, such as Facebook and LinkedIn, to inform the
general public about social activities and job
opportunities. For the first time an X-FAB Instagram
channel was launched, which is used exclusively to
enhance X-FAB’s employer branding in social media.
Within a few weeks the number of followers increased
significantly, which has helped to raise awareness of
X‑FAB as an attractive company.
In addition, each X-FAB site participates in college and
university career fairs in order to recruit interested
students and to provide information about career
opportunities. Besides its presence at job fairs, X-FAB
also participated in numerous technical exhibitions and
conferences to offer its employees the possibility to
gain and exchange professional knowledge and to
network. At the beginning of 2022 most of these
events were held virtually but in the second half of the
year more and more in-person events took place.
X‑FAB developed a social media campaign to serve
customers as well as the general public.
6.3.3 Healthy work environment
Employees’ well-being and safety
X-FAB ensures that all company activities are
performed in a manner that considers the health and
safety of employees, contractors, suppliers, customers,
and the general public with no adverse impact on the
environment through manufacturing operations and
products by operating an EHS management system
that is certified according to ISO 14001:2015.
Education and training to improve employees’ EHS
awareness, safety, and well-being is critical for X-FAB.
Regular safety-related trainings and instructions help
to avoid accidents and injuries. Each location has an
associated company doctor performing routine
medical examinations, such as eye examinations,
vaccinations, travel-related medical consultations, etc.
Security personnel (internal and outsourced) are also
trained to company policies.
Additionally, periodic safety briefings are performed
and a global EHS week program has been established.
At the annual EHS week, information about health
protection, safety, sustainability, and environmental
topics is offered to all employees via information
desks, posters, and other events. Company tours
offered by coworkers are designed to increase
employees’ awareness of hazards in the workplace and
several training sessions are offered to improve their
skills in first aid and firefighting. Furthermore, a variety
of fitness activities and trial lessons as well as fitness
and health checks are offered to employees. In
addition to these dedicated training sessions and
events, information on environmental and quality
awareness is provided and made accessible to all
employees via the company intranet.
At all X-FAB locations, accidents are tracked according
to local laws but there is no globally harmonized
procedure to collect additional information related to
accidents or occupational diseases. However, X-FAB
tracks accidents in the operations department the
same way at all manufacturing locations.
Based on this information, X-FAB recorded 45
accidents in 2022, which caused 7428 work hours lost,
resulting in a frequency rate of 7.75 and a severity rate
of 159.86.
Safety improvement programs that took place in 2022:
•exchange of HLOX (pure liquid oxygen) tank to
resolve leaking filling valve during running of fab
(Dresden); and
•improved toxic/flammable gas detection
monitoring to allow access to central terminal
outside of the hazard area (Lubbock).
Hygiene concepts for cleanrooms
At each of X-FAB’s production sites, a large share of
employees work in a cleanroom where the use of
rubber gloves, special clothes, and shoes is a
requirement. It is necessary to avoid particle and ion
contamination or electrostatic discharge as it would
negatively impact the functionality of the
semiconductor products manufactured. X-FAB aims to
prevent any medical harm as well as ensure a safe
working environment and employees’ well-being.
X‑FAB has therefore established cleanroom concepts
to maintain a high level of hygiene and health including
specific protection plans. For example, to prevent skin
Annual Report 2022 | Corporate social responsibility at X-FAB
94
diseases, there is a skin protection plan in place with
skin care products available at any time for each
employee. For orthopedic reasons, cleanroom shoes
are individualized and ergonomic. Cleanroom clothes
are partially personalized. Ear plugs are available for
noise protection.
Preventive maintenance
Maintenance activities are the basis for the safe
operation of equipment and tools. To prevent
equipment malfunctions and failures X-FAB uses a
global procedure to manage a preventive maintenance
system. Even though the system’s focus is on securing
the productivity of the equipment, operational safety is
one of the objectives covered. The execution of the
global procedure is secured with local instructions,
which manage the preventive maintenance regime for
each production site. The maintenance instructions
and schedule include information based on vendor
manuals, experiences during operation, tool
performance parameters, major incidents, product
quality, and audit findings. Furthermore, two types of
preventive maintenance actions exist: actions
triggered by a time interval, and actions triggered by
reaching special tool parameters describing the
current tool wear.
This all together helps to confirm that the overall tool
status remains excellent and to prevent accidents
caused by machine malfunctions such as electrical
hazards, leakage of dangerous materials, or mechanical
issues.
6.4 Governance
Further information on corporate governance can be
found in section 7 of the annual report.
6.4.1 Anti-corruption and bribery
X-FAB’s business practices follow the principles of fair
competition with particular focus on professional
behavior. X-FAB respects consumer interests by
abiding by regulations that protect consumers, and by
using appropriate sales, marketing, and information
practices in accordance with the ICC International
Code of Advertising Practice and the OECD
Guidelines for Multinational Enterprises.
In particular, X-FAB rejects corruption and bribery as
stated in the relevant UN Convention against
corruption from 2003, and promotes transparency,
trading with integrity, responsible leadership, and
company accountability.
In order to prevent corruption, X-FAB is aiming for an
increased awareness from its employees through
comprehensive and repetitive sessions on the
company values and strict regulations as outlined in the
company handbook. These sessions are attended by all
employees and emphasize the corporate values, such
as integrity and respect, as well as X-FAB’s code of
conduct. Training is organized at least once every two
years, and every employee has to attend. New
employees are provided with special initial training
during their on-boarding. An Ethics and Conflict of
Interest policy is part of X-FAB’s code of conduct.
Furthermore, anti-corruption is mentioned in the
Company’s rules and handbooks, which are part of
each employment contract. Concerns about unethical
behavior are reported either via the workers’ council or
directly to Human Resources.
As an alert system to confidentially report any violation,
in 2018 X-FAB installed a Whistle Blower policy, which
was disclosed to all employees globally. All employees
worldwide can report incidents anonymously in their
native language. All reports are treated confidentially,
and there is a strict no-retaliation policy.
No incidents were reported in 2022.
Ethics training is provided to all employees. At the start
of employment with X-FAB, each new employee
receives a copy of the work regulations, which
comprise policies on harassment prevention and the
acceptance of gifts, and includes a definition of
infractions that lead to legal actions such as contract
termination. Actions taken in response to incidents of
corruption comprise all legal actions according to the
corresponding national laws. In addition to following all
national laws regarding ethical and anti-corruption
behavior, X-FAB does not influence politics, neither by
participating in political activities nor by donating or
supporting parties in elections.
6.4.2 X-FAB’s supply chain
As a manufacturer of a large variety of products,
X‑FAB relies on a number of suppliers. It is part of the
Company’s corporate ethics to strive for long-term
partnerships with its suppliers. The selection and
auditing of suppliers is carried out by means of a global,
cross-site procedure valid for all X-FAB sites. Part of
this procedure is a classification of suppliers, based on,
among others, the supplied quantity as well as the
frequency of supply: tier 1 suppliers, strategic suppliers,
and all others that do not qualify for one of the two
categories. In order to be approved as a new supplier,
depending on the categorization, the supplier has to
pass a process audit according to the requirements of
the automotive standard VDA 6.3 (the German
Association of the Automotive Industry) and answer
various questions, including on environmental topics.
The existence of an environmental management
system and compliance with RoHS or REACH are
important criteria for X-FAB during the selection
process for new suppliers.
6.4.2.1 Selection and categorization of
X-FAB suppliers
X-FAB has implemented and maintains a supplier
selection and monitoring process which is compliant
with the quality management system standards ISO
9001 and IATF 16949 as well as with the environmental
management system standard ISO 14001. Suppliers of
strategic materials are requested to confirm
compliance with X-FAB’s list of banned substances and
have to provide transparent information regarding
95
their quality and environmental management systems
as well as with respect to the composition of the
supplied materials. Those aspects are intensively
checked and validated by X-FAB’s supplier quality
management and procurement organization before
any new strategic material or supplier is released. This
is done via on-site audits and contractual agreements.
After the initial release, which has to be authorized by a
multidisciplinary team, the compliance of suppliers with
the relevant requirements and their overall
performance are continually monitored by X-FAB.
Requirements to qualify as an X-FAB strategic
supplier
•Certified quality management system according
to ISO 9001
•Certified environmental management system
according to ISO 14001
•Demonstrated compliance of quality
management system according to IATF 16949
•Commitment to a code of conduct, e.g. ZVEI
Code of Conduct or equivalent
•Conflict minerals reporting if applicable
X-FAB has a global approach towards sourcing of main
supplies to run the factories and therefore local
suppliers are only taken into account if they meet the
high quality standards.
6.4.2.2 Audits and continual improvement of
suppliers
X-FAB stores all certificates and completed
questionnaires from its suppliers in a database that is
accessible for all X-FAB sites in order to improve the
harmonization and standardization of supplier
management. The most important suppliers are
subject to a supplier assessment once a year. If
X‑FAB’s requirements are not met by at least 85%, the
supplier must submit proposals for improvement to
stay under contract with X-FAB. In addition to these
annual assessments, a regular audit exists to verify the
existence of a management system.
In 2022, supplier audits according to the quality
management system standards ISO 9001, IATF 16949,
and VDA 6.3 for process audits have been performed
by X-FAB’s supplier quality management organization
at seven different suppliers for strategic materials (e.g.
chemicals, gases, wafers) or services, two located in
the United States, one in Europe, and four in Asia.
These audits also focused on environmental and other
aspects according to X-FAB’s standards.
Supplier
Category
Location
Audit type and result
Supplier 1
Gases
Malaysia
Supplier audit / rating A
Supplier 2
Subcontracting
Malaysia
Supplier audit / rating A
Supplier 3
Wafers
United States
Supplier audit / rating A
Supplier 4
Subcontracting
Malaysia
Supplier audit / rating A
Supplier 5
Gases
China
Supplier audit / rating A
Supplier 6
Wafers
United States
Supplier audit / rating A
Supplier 7
Equipment
Germany
Supplier audit / rating B
Fig. 6.23: Supplier audits performed by X-FAB in 2022
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Supplier Corrective Action Requests (SCAR)
In 2022, in total 64 SCARs had to be issued towards
different suppliers, the majority of which have not been
critical with respect to the continuity or quality of the
wafer manufacturing processes at X-FAB nor the
products of our customers. However, all SCARs have
been tracked and the effectiveness of the defined
corrective and preventive actions has been checked
and validated by X-FAB’s supplier quality management
organization.
Engagement with non-compliance suppliers to
reach compliance
In 2022, 19 new quality assurance agreements with
suppliers of X-FAB have been implemented, in order
to ensure the supplier’s commitment to several key
requirements with respect to quality and
environmental management and other aspects.
Furthermore, X-FAB actively supported various
potential suppliers to achieve conformance to the
X‑FAB requirements for strategic suppliers.
To prove the financial sustainability of its suppliers in
2022 X-FAB has established access to an international
database that allows us to check the financial health of
suppliers as well as their revenues. The aim is not only
to ensure that very small suppliers are not in a situation
of financial dependency towards X-FAB, i.e. X-FAB’s
business volume must not represent more than 25% of
a supplier’s revenue), but also to check the financial
sustainability of some critical suppliers.
Furthermore, X-FAB has introduced a supplier award
system to encourage its suppliers to continuously
commit to environmental protection and social
aspects. An annual “Supplier Excellence Award” is
awarded to the best local supplier for each X-FAB site.
The supplier with the highest value in the supplier
assessment is nominated as “Supplier of the Year.”
6.4.2.3 Handling of conflict minerals
X-FAB is aware of the Dodd–Frank Act requirements
regarding, among others, the sourcing of tin, tantalum,
tungsten, and gold from conflict regions and is
accepting its responsibility along the supply chain.
Thus, X-FAB requests all its relevant suppliers to
source minerals from regions that are conflict-free.
The commitment of X-FAB suppliers to these
requirements is documented in a central company
database to ensure traceability and transparency.
RoHS and REACH
RoHS is the short form of the “Directive 2011/65/EU
of the European Parliament and of the Council of
June 8, 2011 on the restriction of the use of certain
hazardous substances in electrical and electronic
equipment.” It aims to address the global issue of
consumer electronics waste. It pertains to
manufacturing of various types of electronic and
electrical equipment without the use of six different
hazardous materials. It is the responsibility of the
company that puts the product on the market to
comply with the directive. REACH stands for
Registration, Evaluation, Authorization, and
Restriction of Chemicals. The purpose of this
European Union regulation is to address the
production and use of chemical substances and
their potential impacts on both human health and
the environment. Whereas RoHS bans substances
that are present in electrical equipment, REACH
pertains to all chemicals including those used to
make a product. This can include materials, solvents,
paints, chemicals, and more.
X-FAB has described a product declaration
committing that to the best of its knowledge, X-FAB
products do not contain materials that had been
sourced from mines in conflict regions in the eastern
region of the Democratic Republic of Congo. X-FAB
does checks on smelters to ensure that they are
certified conflict-free by comparing them against the
list of compliant smelters under the Responsible Mining
Alliance (RMA) website.
All strategic material suppliers for materials containing
tungsten, tantalum, tin, and gold must complete the
Conflict-Free Smelter Reporting Template.
X-FAB is also working with suppliers on other minerals
disclosures. These include cobalt and mica reporting.
Currently, X-FAB is working with suppliers to ensure it
sources from conflict-free cobalt smelters. X-FAB
products do not contain mica.
6.4.3 Data security
Customer data privacy
The protection of customer data is of the highest
importance to X-FAB and all stakeholders and is crucial
to safeguarding X-FAB’s reputation and brand. X-FAB
currently does not apply a customer data deletion
concept due to adherence with the IATF automotive
standard, which allows for deletion only after at least 15
years of inactivity. X-FAB deactivates data records
whenever requested and has not received any
customer complaints about data privacy. X-FAB
applies an email opt-out system for customer data for
hotline news, webinars, and customer surveys. These
are maintained via different technologies, including the
ERP system, the survey, and the email marketing tool,
in an automated or semi-automated way.
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Cybersecurity
X-FAB IT's strategies for 2022-2025 focus on
improving IT security by continuing to provide
cybersecurity awareness training and phishing
campaigns to employees and thus becoming the
human firewall in protecting X-FAB from cyber threats.
X-FAB IT is also conducting IT Security Posture
Maturity Assessments to improve the Information
Security Management System and monitor the
readiness of the X-FAB sites.
To ensure the security of the Group's IT systems and
assets, X-FAB IT has established a Global IT Security
Team composed of experts responsible for
implementing security policies, monitoring for threats,
responding to cybersecurity incidents, and
implementing security controls.
In addition, X-FAB IT has established an IT Security
Committee, composed of dedicated cybersecurity
professionals from IT departments from various sites. It
oversees and advises on the Group’s IT security
projects and initiatives, reviews and approves security
policies, and ensures compliance with laws and
regulations. It regularly evaluates and recommends
improvements to X-FAB IT cybersecurity programs.
The IT Security Committee meets periodically to
discuss emerging cybersecurity risks and vulnerabilities
and to make key decisions regarding the Group’s IT
security.
6.4.4 X-FAB’s responsibility towards its customers
and society
In line with its EHS policy, X-FAB continually works on
the reduction of its environmental impact via legal
compliance and also promotes human rights values
among suppliers and customers. It is X-FAB’s policy to
ensure that all purchased materials are compliant with
current government and safety constraints on
restricted, toxic, and hazardous materials and that all
environmental standards, applicable to the country of
manufacture and sale, are fulfilled.
X-FAB follows RoHS and meets the requirements of
REACH. X-FAB thereby confirms that all its products
are halogen-free and do not contain intentionally
introduced lead (Pb), cadmium (Cd), mercury (Hg),
hexavalent chromium (Cr6+), polybrominated biphenyl
(PBB), polybrominated diphenyl ether (PBDE), bis(2-
ethylhexyl) phthalate (DEHP), butyl benzyl phthalate
(BBP), dibutyl phthalate (DBP), or diisobutyl phthalate
(DIBP). Furthermore, RoHS and REACH-conformant
safety data sheets are available for all X-FAB products
and are accessible to every X-FAB customer on the
Company’s website. Finally, all products do not contain
any of the substances in the ECHA (European
Chemicals Agency) Candidate List of Substances of
Very High Concern.
There is a global procedure in place to control and
avoid negative health and safety impacts, requiring
that every X-FAB product is tested at every stage of
development. In addition, all X-FAB products are
inspected annually by an external laboratory for
hazardous substances, and the Company’s customers
are informed about the results by means of product
declarations.
It is part of the Company’s ethics that products are not
sold into countries that are listed on an embargo list for
corresponding products. During 2022, X-FAB was
compliant with laws in relation to this provision and the
use of X-FAB products and did not have to pay any
fines for violations.
6.5 EU taxonomy
The European Green Deal is a set of initiatives by the
European Commission with the overarching objective
for the EU to become climate neutral by 2050. In this
context and in order to channel investments of the
financial sector to more sustainable technologies and
businesses, the EU has developed a common
classification system, referred to as the EU taxonomy,
which is aimed to provide guidance to companies,
investors, and policymakers on which economic
activities can be considered environmentally
sustainable.
The Taxonomy Regulation (Regulation (EU)
2020/852) was published in the Official Journal of the
European Union on June 22, 2020, and entered into
force on July 12, 2020. The EU taxonomy defines
specific performance criteria to assess an economic
activity’s contribution towards six environmental
objectives: climate change mitigation, climate change
adaptation, the sustainable use and protection of water
and marine resources, the transition to a circular
economy, pollution prevention and control, and the
protection and restoration of biodiversity and
ecosystems. Technical screening criteria for each
environmental objective will be defined through
delegated acts.
The Delegated Act (Commission Delegated
Regulation (EU) 2021/2139) on climate mitigation and
climate adaptation, laying out the technical screening
criteria that define whether an economic activity
substantially contributes to the objective of climate
change mitigation or climate change adaptation, was
published in the Official Journal on December 9, 2021.
This also includes minimum safeguards that must be
secured for the other four environmental objectives of
the taxonomy, the so-called Do No Significant Harm
(DNSH) criteria. The delegated acts defining the rules
and requirements on the reporting requirements for
the other environmental objectives are yet to be
published.
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These new reporting requirements are being
introduced gradually. For 2022, companies need to
report on the eligibility and alignment of their activities
regarding the environmental objectives of climate
change mitigation and adaptation. However, the
interpretation of the EU taxonomy is unclear with many
rules, regulations, and guidelines still under
development. The following paragraphs describe
X‑FAB’s approach based on the current stance of the
legislative framework.
Assessment by X-FAB
The EU taxonomy currently does not list an activity
that specifically describes X-FAB’s business. The
activity that most closely describes X-FAB’s business is
activity 3.6, “Manufacturing of other low carbon
technologies.” However, it is clear that X-FAB is an
enabler of technologies that significantly reduce
energy consumption and greenhouse gas (GHG)
emissions. By providing robust analog/mixed-signal
CMOS processes, MEMS, and wide-bandgap
semiconductors, X-FAB contributes to the creation of
sustainable and energy-efficient products in various
fields, such as mobility and the energy sector. Sensors
and power devices improve the energy efficiency of
electric vehicles and optimize the energy use of the
drivetrain. High-voltage technologies including silicon
carbide support the transition to renewable energy by
enabling the efficient generation, conversion, and
storage of energy. These activities are therefore
contributing to climate change mitigation since they
contribute substantially to the stabilization of GHG
concentrations consistent with the long-term
temperature goal of the Paris Agreement, through the
avoidance or reduction of GHG emissions or the
increase of GHG removals, including through process
and product innovations.
An economic activity qualifies as contributing
substantially to climate change adaptation if that
activity provides adaptation solutions that contribute
substantially to reducing or preventing the adverse
impact of the current or expected future climate, or
the risk of such adverse impact, on that activity itself or
on people, nature or assets. So far, X-FAB and its
customers’ activities are mainly focused on climate
change mitigation. X-FAB therefore focuses this
reporting on the climate change mitigation objective.
1. Turnover
To report turnover under this section, the definition of
turnover in accordance with International Financial
Reporting Standards (IFRS) is used.
An economic activity is deemed eligible where it
matches the description set out in one of the
delegated acts adopted by the Commission. For an
activity to be eligible for climate change mitigation
under this category, the activity needs to have the
objective of enabling a substantial reduction of GHG
emissions in another sector of the economy.
Semiconductor manufacturing can therefore be a
taxonomy-eligible activity where it enables another
economic activity to make substantial GHG emission
savings.
X-FAB has analyzed its activities by categorizing its
technologies based on whether they are aimed at
substantially reducing GHG emissions in another sector
of the economy. For example, technologies that
provide superior isolation for high voltages or
technologies that, due to their material properties,
offer the possibility of developing systems with
maximum energy efficiency (e.g., wide bandgap
technologies) are deemed by X-FAB to be eligible
under the taxonomy regulation.
An eligible activity must fulfil four basic criteria to be
classified as aligned.
1. It must substantially contribute to at least one of the
environmental objectives, 
To contribute substantially to climate change
mitigation, the economic activity must manufacture
technologies that are aimed at and demonstrate
substantial lifecycle GHG emission savings compared
to the best performing alternative technology/
product/solution available on the market. The GHG
reduction across the lifecycle could be evaluated
based on product lifecycle emissions and applications.
As a pure-play foundry, however, we do not have the
necessary information from the end market to make
such a complete lifecycle assessment.
2. It must comply with the technical screening criteria
established by the Commission.
3. It must not significantly harm any of the
environmental objectives.
This criterion is put in place to avoid that activities
qualify as environmentally sustainable in cases where
the economic activities benefitting from those
investments cause harm to the environment to an
extent that outweighs their contribution to an
environmental objective. There are several aspects to
this. Companies must:
•carry out a risk and vulnerability assessment
to identify solutions for climate change
adaptation;
•use water in a sustainable way and protect
water and marine resources;
•assess whether there are techniques available
for the economic activity in question that
support circular economy principles;
•comply with the criteria on pollution
prevention and control; and
•comply with the criteria relating to the
protection and restoration of biodiversity and
ecosystems.
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The semiconductor industry heavily relies on the use of
chemicals. The current wording regarding the aspect
of pollution prevention and control therefore gives rise
to a lot of questions. An economic activity may not lead
to the manufacture, placing on the market, or use of
certain chemicals in order to be taxonomy-aligned. The
Climate Delegated Act refers to other existing EU
legislation that regulates the use of certain chemicals
(REACH and RoHS). X-FAB is, of course, very familiar
with these pieces of legislation and complies with them.
However, the Climate Delegated Act does not seem to
allow for the existing exemptions and derogations for
the use of certain chemicals in very specific cases.
Several industry associations have already addressed
this point to the European Commission.
4. It must be carried out in compliance with certain
minimum safeguards.
Article 18 of the taxonomy regulation requires
companies to implement procedures to ensure the
alignment of their activities with the OECD Guidelines 
for Multinational Enterprises and the UN Guiding
Principles on Business and Human Rights, including the
principles and rights set out in the eight fundamental
conventions identified in the Declaration of the
International Labour Organization on Fundamental
Principles and Rights at Work and the International Bill
of Human Rights. Sections 6.4.1 and 6.4.2 of this Annual
Report describe how X-FAB makes sure that it carries
out its economic activities in an honest, responsible,
and respectful way.
Based on the above-described uncertainties and the
current status of the legislation, X-FAB deems it
prudent to report a 0% alignment.
Economic
activity
Activity
description
Proportion
eligible
Proportion
aligned
3.6
Manufacture of
other low-carbon
technologies
43.07%
0%
2. CapEx
The Disclosures Delegated Act (Commission
Delegated Regulation (EU) 2021/2178) defines CapEx.
It covers additions to tangible and intangible assets
during the financial year considered before
depreciation, amortization and any remeasurements,
including those resulting from revaluations and
impairments, for the relevant financial year and
excluding fair value changes.
The CapEx can be categorized into two types:
a.Technology CapEx: the eligibility for the
technology CapEx is based on the
categorizing of technologies as done for
determining eligibility for turnover. For the
same reasons as above, X-FAB deems it
prudent to report a 0% alignment.
b.Facilities CapEx: this CapEx mainly relates to
the following activities:
i.installation, maintenance and repair
of charging stations for electric
vehicles in buildings;
ii.installation, maintenance and repair
of energy efficiency equipment;
iii.installation, maintenance and repair
of instruments and devices for
measuring, regulation and controlling
energy performance of buildings.
We have assessed the respective substantial
contribution and DNSH criteria and show the results in
the table below.
Economic
activity
Activity
description
Proportion
eligible
Proportion
aligned
3.6
Manufacture of
other low-carbon
technologies
(technology
CapEx)
74.31%
0%
7.3-7.5
Facilities CapEx
1.17%
100%
TOTAL
74.84%
1.17%
3. OpEx
According to the Disclosures Delegated Act, OpEx
covers direct non-capitalized costs that relate to
research and development, building renovation
measures, short-term lease, maintenance and repair,
and any other direct expenditures relating to the day-
to-day servicing of assets of property, plant and
equipment by the undertaking or third party to whom
activities are outsourced that are necessary to ensure
the continued and effective functioning of such assets.
X-FAB focuses on research and development costs
since the other costs that could possibly fall within this
definition are likely to be immaterial in comparison. 
The proportion of eligible R&D activities has been
determined by looking at the same categorizing of
technologies as done for determining eligibility for
turnover. For the same reasons as above, X-FAB
deems it prudent to report a 0% alignment.
Economic
activity
Activity
description
Proportion
Eligible
Proportion
Aligned
3.6
Manufacture of
other low-carbon
technologies
55.12%
0%
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7. CORPORATE GOVERNANCE
STATEMENT
The Royal Decree of May 12, 2019 (published in the
Belgian Official Gazette on May 17, 2019) designated
the Belgian Corporate Governance Code 2020 as the
reference code for Belgian listed companies. This
Code is available for download on the website of the
Belgian Corporate Governance Committee
(www.corporategovernancecommittee.be).
In view of the “comply-or-explain” principle of the
Code, section 7.12 gives an overview of the provisions
of the Belgian Corporate Governance Code 2020 that
X-FAB does not comply with, along with an explanation
of the reasons for non-compliance.
X-FAB’s Corporate Governance Charter is in alignment
with the 2020 Code on Corporate Governance. The
Corporate Governance Charter can be consulted on
the “Investors” page of the Company’s website.
7.1 Shareholders
X-FAB seeks to guarantee transparent and clear
communication with its shareholders. Active
participation of the shareholders is encouraged by
X‑FAB.
In order to achieve this goal, shareholders can find
important and relevant information on X-FAB’s
website. X-FAB publishes its annual reports, half-year
reports, statutory reports, quarterly results, and
financial calendar on its website in the “Investors”
section. X-FAB realizes that the publication of these
reports and information benefits its trust-based
relationship with its shareholders and other
stakeholders.
Furthermore, X-FAB is committed to guaranteeing
shareholder rights.
•At the Shareholders’ Meeting, the Chairman will
lead the meeting in such a manner that there will be
sufficient time to answer questions that
shareholders may have relating to the annual
report, special reports, and/or the items on the
agenda.
•At the latest 30 days prior to the general meeting,
the agenda and other relevant documents are
published in different locations including X-FAB’s
website and the Belgian Official Gazette.
•Shareholders representing at least 10% of the share
capital have the right to add items and/or
resolution proposals to the agenda.
•During the general meeting, shareholders have the
right to vote on each item on the agenda. If they
cannot attend the general meeting, they have the
right to appoint a proxy.
•The minutes of the general meeting with the voting
results will be kept in a special register after the
general meeting.
Chapter 8 shows the shareholder structure of X-FAB
based on the transparency notifications received.
7.2 Management structure
X-FAB has opted for a “one-tier” governance structure
whereby the Board of Directors is the ultimate
decision-making body, with overall responsibility for
the management and control of the Company. The
Board of Directors is vested with the power to perform
all acts that are necessary or useful for the realization
of the Company’s purpose, except for those actions
that are specifically reserved by law or the Articles of
Association to the shareholders’ meeting or other
management bodies. As such, the Board, among
others, defines the general policy orientations, decides
on major strategic, financial, and operational matters,
and oversees the management.
The Board has established committees (an Audit
Committee and a Remuneration and Nomination
Committee) to analyze specific issues and advise the
Board on those issues. The decision-making power
remains within the responsibility of the Board of
Directors itself.
The daily management of X-FAB has been delegated
by the Board of Directors to the Chief Executive
Officer, Sensinnovat BV, permanently represented by
Rudi De Winter, who can represent the Company with
his sole signature within and outside the framework of
the daily management. For actions that fall outside the
scope of the daily management, X-FAB is also validly
represented by two directors acting jointly.
The Chief Executive Officer is the chairman of the
Executive Management. The Executive Management is
responsible for leading X-FAB in accordance with the
global strategy, values, planning, and budgets as set
out and approved by the Board of Directors. The
Executive Management is also responsible for
screening the various risks and opportunities that the
Company might encounter in the short, medium, or
longer term, as well as for ensuring that systems are in
place to identify and address these risks and
opportunities.
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7.3 Board of Directors
Composition
In accordance with Article 15 of X-FAB’s Articles of
Association, the Board of Directors consists of at least
five members. At least three members should be
independent in accordance with Article 7:87 BCCA. As
of the date of this annual report, the Board of Directors
comprises nine members, three of which are indeed
independent. At least half of the Board of Directors
consists of non-executive members, and there is at
least one executive member. Independent directors
qualify as non-executive directors.
The term of office of directors under Belgian law is
limited to six years (renewable) but the Corporate
Governance Code recommends that it be limited to
four years. Directors of X-FAB are appointed for a
period of four years by the majority of the votes cast at
the general meeting, after having received a
recommendation of the Remuneration and Nomination
Committee. In the same way the general meeting may
revoke a director at any time. There is no age limit for
directors, and directors with an expiring mandate can
be reappointed within the limits stipulated in the BCCA.
The Chief Executive Officer is the only member of the
Board of Directors that has an executive mandate. The
Chair of the Board is Tan Sri Datuk Amar Dr. Hamid bin
Bugo.
The composition of the Board of Directors already
takes into account Article 7:86 BCCA which requires
that one third of its members have to be of a different
gender.
The directors of X-FAB are:
Name
Age
Mandate expires
Position
Dato Sri Dr. Wan Lizozman bin Wan
Omar
58
2026
Non-executive director
Sensinnovat BV
(Represented by Rudi De Winter)
62
2025
Managing Director, CEO
Roland Duchâtelet
76
2025
Non-executive director
Thomas Hans-Jürgen Straub
68
2025
Non-executive director
Tan Sri Datuk Amar Dr. Hamid bin Bugo
77
2025
Non-executive director (Chair)
Aurore NV (Represented by Christine
Juliam)
62
2026
Non-executive and independent director
Christel Verschaeren
58
2025
Non-executive and independent director
Estelle Iacona
50
2025
Non-executive and independent director
Vlinvlin BV (Represented by Ling Qi)
52
2023
Non-executive director
Sensinnovat BV is represented by Rudi De Winter.
Mr. De Winter joined X-FAB in 2011 as Co-CEO and
became CEO in 2014. Between 1996 and 2011 he
served as the Chief Executive Officer and Managing
Director of Melexis NV. Prior to that date, Mr. De
Winter served as a development engineer at Mietec
Alcatel (Belgium) from 1984 to 1985 and as a
development manager at Elmos GmbH (Germany)
from 1985 to 1989. In 1990, Mr. De Winter became
director together with Mr. Duchâtelet of XTRION NV,
the parent company of X-FAB. Mr. De Winter holds a
degree in electronic engineering from the University of
Ghent.
Throughout his career, Roland Duchâtelet has founded
several companies and has organized approximately
50 acquisitions or sales of companies. He has been
active in the internet business since 2000 and was a
member of the Belgian Senate from 2007 to 2010.
Mr. Duchâtelet is the co-founder of the parent
company of X-FAB. He holds degrees in electrical
engineering and applied economics from the
University of Leuven and obtained an MBA from the
same university.
Thomas Hans-Jürgen Straub has more than 30 years
of experience in the management of semiconductor
companies. From 1982 to 1990, Mr. Straub served as
Head of Central Planning at the Kombinat
Mikroelektronik in Erfurt. Thereafter, Mr. Straub was a
member of the managing board of PTC Electronic AG,
a holding company that managed 18 subsidiaries. From
1991 to 1999, Mr. Straub served as president of several
companies, including Mikroelektronik und
Technologie-Gesellschaft mbH, Dresden and Thesys
Gesellschaft für Mikroelektronik mbH, Erfurt. From
1999 to 2014, Mr. Straub served as Chief Executive
Officer of X-FAB. Mr. Straub holds a diploma in
economics from the Hochschule für Ökonomie Berlin
(Berlin Business School).
Tan Sri Datuk Amar (Dr.) Hamid bin Bugo has worked
as personnel manager for Malaysia LNG Sdn Bhd, a
joint venture between Petronas, Shell, and Mitsubishi.
He was the first general manager of the Land Custody
and Development Authority, Sarawak, and was
permanent secretary to the Ministry of Resource
Planning, and state secretary of Sarawak. Tan Sri Datuk
Amar Dr. Hamid bin Bugo has also served as a board
105
member of several corporate and governmental
agencies and charitable organizations. After graduating
with a master’s degree in economics and political
science from the University of Canterbury, New
Zealand, he gained a postgraduate diploma in teaching
from Christchurch Teachers’ College, New Zealand,
and has a certificate in business studies from the
Harvard Institute of Development Studies, USA. Tan Sri
Datuk Amar (Dr.) Hamid bin Bugo was awarded an
honorary PhD in commerce by Lincoln University, New
Zealand. Currently, he is Chairman of the National
Library Council of Malaysia, Petroleum Sarawak Berhad
and board member of Sapura Resources Berhad.
Dato Sri Dr. Wan Lizozman bin Wan Omar is the State
Financial Secretary of Sarawak. Before that he served
as Deputy State Financial Officer and formerly as
Permanent Secretary in the Ministry of Urban
Development and Natural Resources as well as the
Ministry of Housing Sarawak. Besides his role as State
Financial Secretary, Dato Sri Dr. Wan Lizozman bin Wan
Omar is chairman of two Malaysian state government-
linked companies as well as a director of various state-
owned companies. Moreover, he is a board member of
the Sarawak Economic Development Corporation
(SEDC) and the Sarawak Timber Industry
Development Corporation (STIDC). His academic
qualifications include a certificate in Southeast Asian
studies from Columbia University, New York City, USA,
a bachelor of science degree in economic and political
science from the University of Northern Illinois, USA,
followed by a master’s degree in international affairs
(economic development) from the School of
International & Public Affairs, Columbia University, New
York City, USA. In 2014, he was awarded a PhD in
business studies from UNIMAS (University Malaysia
Sarawak).
Aurore NV is represented by Christine Juliam. She
started her career in clinical research at MSD in
Belgium before moving into product management, and
subsequently into sales, marketing, and business
planning responsibilities. In July 1996, she started to
work for Abbott Belgium as director of its
pharmaceutical product division and joined Nycomed
as Managing Director Belgium/Luxembourg in 2006.
From 2011 onwards she was Region Head for France,
the Netherlands, Belgium, and Luxembourg for
Nycomed, which was acquired by Takeda in the same
year. Subsequently, Ms. Juliam managed Takeda Italy
and France as country manager between 2013 and
2017. In 2021, Ms. Juliam started as General Manager at
Orifarm. Christine Juliam has a doctor of medicine
degree from the University of Ghent, a license in
marketing from St. Aloysius College in Brussels, a
master’s in management from Solvay Commercial
School in Brussels, and an MBA from Northwestern
University.
Christel Verschaeren served for 29 years at IBM. She
held different technical positions as well as commercial
leadership positions in general business, channel sales,
and inside sales. She led business operations for IBM
Belgium/Luxembourg for three years. In 2005, she
became Director of Business Transformation and IT for
IBM Europe. From 2010 until 2012 she served as
Director Global Organizational Change Management.
From 2012 until 2016 she was the VP of CIO Services in
EMEA. Ms. Verschaeren holds a master’s in economics
from the University of Antwerp.
Estelle Iacona is professor in physics of
CentraleSupélec. She was a director of EM2C
laboratory (CNRS, École Centrale Paris) from 2008 to
2012 after which she became Dean and Vice-President
Research of the École Centrale Paris and of
CentraleSupélec. She served as Executive Vice-
President for Academic Affairs at CentraleSupélec
from 2016 to 2019. She was also a member of the
board of École Centrale Casablanca. In 2020, Estelle
Iacona was elected as Senior Vice-President at Paris-
Saclay University. Currently she is President at Paris-
Saclay University. Ms. Iacona holds an engineering
degree and a master of science from the University of
Nantes (Polytech’Nantes) and a PhD in physics of
transfer from the École Centrale Paris.
Vlinvlin BV is represented by Ling Qi. Ling Qi has more
than 20 years of international business management
experience in China. After winning an English language
competition from a field of one thousand competitors,
she organized international trade fairs and trade
missions for the city government of Shenyang and was
the personal translator for the mayor of Shenyang. She
left politics to host a weekly TV program with news and
interviews of foreign expats in China. In 1996, she
became vice-president of the animation film company
OHY in charge for the company’s business in the US. In
2000, Ling Qi married Belgian director Wouter Dierickx
with whom she founded Sophie Animation Ltd.
Currently, she is CEO of two multimedia and animation
film companies. Alongside this, Ling Qi has been
consulting for foreign invested companies in China and
is a board member of a Belgian private bank. She holds
a degree in international trade and English from the
University of Liaoning and obtained a certificate of
Dutch at University of Antwerp.
Appointment and replacement of directors
The Articles of Association (Article 16) and the X-FAB
Corporate Governance Charter contain specific rules
concerning the (re)appointment, the induction, and the
evaluation of directors. Directors are appointed for a
term not exceeding four years by the general meeting
of shareholders, who can also revoke their mandate at
any time. An appointment or dismissal requires a simple
majority of the votes cast.
If and when a position of a director prematurely
becomes vacant within the Board, the remaining
directors have the right to temporarily appoint a new
director until the next general meeting which shall
confirm such appointment. Said appointment will then
be included in the agenda of the next general meeting.
The Remuneration and Nomination Committee makes
recommendations to the Board with regard to the
Annual Report 2022 | Corporate governance statement
106
appointment of directors, the CEO, and the other
members of the Executive Management. The
Committee will consider proposals made by the
members of the Board or other relevant parties.
Functioning of the Board
The internal regulation of the Board is part of the
Corporate Governance Charter. In principle, the Board
of Directors meets on a quarterly basis. Additional
meetings may be called with appropriate notice at any
time to address specific needs of the business. A
meeting of the Board of Directors must in any event be
convened if requested by at least two directors.
The Board convened seven times in 2022 and
discussed, among others, the following topics:
•the financial results of the Group;
•the business plan and capital expenditure;
•the budget for the financial year 2023; and
•the ESG-strategy.
Dato Sri Dr. Wan Lizozman bin Wan Omar was excused
for one meeting and was represented by proxy at
three other meetings of the Board. Also, Tan Sri Datuk
Amar Dr. Hamid bin Bugo was excused for one
meeting. Christel Verschaeren was represented by
proxy at one meeting. Other than that, all Board
members attended all meetings.
Under the lead of the Chairman, the Board regularly
evaluates its scope, composition, and performance and
that of its committees, as well as the interaction with
the Executive Management. The next evaluation will be
performed in 2023.
7.4 Committees
Audit Committee
The Audit Committee advises the Board of Directors
on accounting, audit, and internal control matters as
further detailed in the Company’s Corporate
Governance Charter. The Audit Committee also assists
the Executive Management in its assessment and
follow-up of the auditor’s recommendations.
The Audit Committee is composed of four non-
executive members: Aurore NV, represented by
Christine Juliam, independent director and Chair;
Christel Verschaeren, independent director; Tan Sri
Datuk Amar Dr. Hamid bin Bugo, non-executive
director; and Estelle Iacona, independent director.
According to Article 7:99 BCCA the members of the
Audit Committee maintain a collective expertise in the
field of the Company’s activities. At least one of them
shall have accounting and audit expertise. Given his
education as well as extensive experience as a board
member for a number of different companies, Tan Sri
Datuk Amar Dr. Hamid bin Bugo complies with this
requirement.
In 2022, the Audit Committee met four times. During
these meetings the audit plan and key audit matters
were discussed with the external auditor. Other topics
covered were the results of the internal audit and the
renewal of the audit mandate. All members of the
Audit Committee as well as the external auditor
attended all meetings. The internal auditor was present
at two meetings.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee advises
the Board of Directors principally on matters regarding
the appointment and remuneration of directors and
members of the Executive Management.
The Remuneration and Nomination Committee is
composed of four non-executive members: Christel
Verschaeren, Chair; Aurore NV, represented by
Christine Juliam, independent director; Tan Sri Datuk
Amar Dr. Hamid bin Bugo, non-executive director; and
Estelle Iacona, independent director.
The Remuneration and Nomination Committee met
three times in 2022. During these meetings, matters
such as the remuneration and succession of the
Executive Management and the (re)appointment of
directors were discussed. All members of the
Remuneration and Nomination Committee attended all
meetings.
107
7.5 Executive Management
Composition
The Executive Management is composed of the following members:
Name
Age
Position
Rudi De Winter
62
Chief Executive Officer
Alba Morganti
54
Chief Financial Officer
Jörg Doblaski
44
Chief Technology Officer
Lee Boon Chun
53
Chief Executive Officer, X-FAB Sarawak
Dr. Jocelyne Wasselin
64
Chief Executive Officer, X-FAB France
Lloyd Whetzel
65
Chief Executive Officer, X-FAB Texas
Dr. Gabriel Kittler
44
Chief Executive Officer, X-FAB Erfurt
Rico Tillner
40
Chief Executive Officer, X-FAB Dresden
Functioning
The Executive Management Team is composed of the
CEO, the CFO, the CTO, and the site managers of
X‑FAB France, X-FAB Sarawak, X-FAB Texas, X-FAB
Erfurt, and X-FAB Dresden. The members are
appointed and removed by the Board of Directors
after having received the advice of the CEO and the
Remuneration and Nomination Committee.
The Executive Management Team exercises the duties
assigned to it by the Board of Directors and the CEO,
under the ultimate supervision of the Board of
Directors.
The CEO leads the Executive Management Team,
within the framework established by the Board of
Directors and under its ultimate supervision. The CEO
chairs the Executive Management Team.
7.6 Diversity policy
The Remuneration Committee and the Board of
Directors ensure that diversity criteria such as age,
gender, and background are taken into consideration in
its selection processes and management of succession
planning.
At the end of the reporting year, four of the nine
members of the Board were female, thereby reaching
the best possible equilibrium in terms of gender
diversity. The composition of the Board is in line with
the requirements of the BCCA on diversity. The
Executive Management Team also consists of a
diverse team in terms of age, background, and gender.
7.7 Remuneration report
The remuneration of the directors and the Executive
Management is governed by X-FAB’s remuneration
policy which can be found at www.xfab.com/investors.
The remuneration policy was approved by the
Shareholders’ Meeting on April 29, 2021. This
remuneration report has been prepared in accordance
with Article 3:6, §3 BCCA as introduced by law on
April 28, 2020.
Total remuneration
The application of the remuneration policy during 2022
for the directors and executives led to the effective
remuneration as shown in the table on the next page.
The non-executive and independent Directors receive
a compensation for their mandate as director. Such
compensation consists of a fixed annual amount of
EUR 15.000. The remuneration of Directors takes into
account their membership(s) in any of the board
committees; for each membership in a board
committee directors receive an additional fixed
amount of EUR 5.000 per committee. Such
compensation is independent from their participation
rate in board or board committee meetings.
Roland Duchâtelet waived his right to receive any
remuneration as a non-executive Board member. In
2022 Vlinvlin BV (represented by Ling Qi) and Hans-
Jürgen Straub received additional remuneration of
USD 68,699 and USD 14,686 respectively for
consultancy services provided to the Strategy
department above and beyond her work as director of
the Company. Hans-Jürgen Straub received an
additional USD 10,543 for his mandate on the
supervisory board of X-FAB Semiconductor Foundries
GmbH.
Members of the Executive Management who are
employed by X-FAB Group companies under an
employment contract also benefit from group
insurance policies in their respective home countries
providing various pension, life insurance, disability, and
medical insurance benefits, all of which are defined
contribution schemes. All these group insurance
elements are in line with home country market
practices and only represent a minor portion of their
respective remuneration packages. The base salary for
Members of the Executive Management who are
employees does not include the employer
contributions.
Annual Report 2022 | Corporate governance statement
108
in U.S. dollars
Name, position
1. Fixed remuneration
2. Variable remuneration
Base salary
Fees
Other benefits
One-year
variable
Multi-year
variable
Roland Duchâtelet, Non-
executive director
—
—
—
—
—
Thomas Hans- Jürgen Straub,
Non-executive director
15,814.65
—
25,229.10
—
—
Tan Sri Dr. Hamid bin Bugo, Non-
executive director
26,357.75
—
—
—
—
Aurore NV (Represented by
Christine Juliam), Independent
director
26,357.75
—
—
—
—
Christel Verschaeren,
Independent director
26,357.75
—
—
—
—
Estelle Iacona, Independent
director
26,357.75
—
—
—
—
Vlinvlin BV (Represented by Ling
Qi), Non-executive director
15,814.65
—
68,699.17
—
—
Sensinnovat BV, permanently
represented by Rudi De Winter,
Executive, CEO
384,823.15
—
—
41,368.49
96,205.79
Executive Management excl.
Sensinnovat BV
1,088,758.14
—
67,272.43
127,931.21
—
109
in U.S. dollars
Name, position
3. Extra-
ordinary items
4. Pension
expense
5. Total
remuneration
6. Proportion of fixed and
variable remuneration
Roland Duchâtelet, Non-
executive director
—
—
—
Fixed:
100%
Thomas Hans- Jürgen Straub,
Non-executive director
—
—
41,043.75
Fixed:
100%
Tan Sri Dr. Hamid bin Bugo,
Non-executive director
—
—
26,357.75
Fixed:
100%
Aurore NV (Represented by
Christine Juliam), Independent
director
—
—
26,357.75
Fixed:
100%
Christel Verschaeren,
Independent director
—
—
26,357.75
Fixed:
100%
Estelle Iacona, Independent
director
—
—
26,357.75
Fixed:
100%
Vlinvlin BV (Represented by Ling
Qi), Non-executive director
—
—
84,513.82
Fixed:
100%
Sensinnovat BV, permanently
represented by Rudi De Winter,
Executive, CEO
—
—
522,397.43
Fixed:
74%
Variable:
26%
Executive Management excl.
Sensinnovat BV
—
101,352.50
1,385,314.28
Fixed:
91%
Variable:
9%
2,138,700.28
Annual Report 2022 | Corporate governance statement
110
Application of the performance criteria
CEO
The variable remuneration for the CEO is a cash bonus
that is capped at 50% of the annual base salary. It
contains short, medium and long-term elements:
•short term: 50% of the variable remuneration is
based on performance criteria measured over one
financial year;
•medium term: 25% is based on performance
criteria measured over two financial years; and
•long term: 25% is based on performance criteria
measured over three financial years.
The cash bonus for the CEO is calculated by reference
to yearly established targets to reflect global business
performance criteria, which are measured on an X-FAB
Group consolidated basis. Where financial indicators
are used these are based on reported figures
determined in accordance with IFRS accounting
standards. The targets are as follows:
•50% of the cash bonus (the short-term element)
depends on the achievement of the target EBIT of
X-FAB measured over the performance year in
order to link the bonus to the operational result of
X-FAB; and
•50% of the cash bonus (the medium and long-
term element) is dependent on X-FAB generating
revenue growth that outperforms the industry
average over the last one or two years, whereby
the industry reference growth is determined by
reference to the November Q4 Update to The
McClean Report 2022 by IC Insights. The
forecasts for optoelectronics, sensors and
actuators, and discrete (O-S-D) devices is used as
a reference value.
Short-term cash bonus (one-year variable)
The results for performance year 2022 are shown in
the table below. In 2022 the EBIT was USD 57.3 million.
This means that 43% of the short-term cash bonus will
be paid out.
in U.S. dollars
Performance criteria
a)
Minimum threshold
performance
a)
Maximum performance
a)
Measured performance
b)
Corresponding
remuneration
b)
Corresponding
remuneration
b)
Actual remuneration
outcome
Global business
performance
a)
2,500,000
a)
130,000,000
a)
57,335,000
Relative weighting 50%
b)
0
b)
96,206
b)
41,368
Total bonus
0
96,206
41,368
Medium and long-term cash bonus (two and three-
year variable)
The two and three-year variable remuneration of the
CEO depends on X-FAB generating revenue growth
over the last one or two years exceeding the industry
average using the statistics for the optoelectronics,
sensors and actuators, and discrete (O-S-D) devices
market published in the McClean Report 2023 by
IC Insights as a reference value.
The results for performance year 2022 are shown in
the table below. In 2022, the revenue growth was 12%
compared to 2021. The industry average amounted to
8%. The revenue growth compared to 2020 was 55%
while the industry averaged 28%. This results in the
bonus calculation as depicted in the following table.
111
in U.S. dollars
Performance criteria
a)
Threshold performance
a)
Measured performance
b)
Corresponding remuneration
b)
Actual remuneration outcome
Revenue growth over the last
year
a)
Revenue growth >8%
a)
12%
b)
48,103
48,103
Revenue growth over the last
two years
a)
Revenue growth >28%
b)
55%
b)
48,103
48,103
Total bonus
96,206
96,206
Annual Report 2022 | Corporate governance statement
112
Other members of the Executive Management
The variable remuneration for the other members of
the Executive Management consists of a short-term
cash bonus expressed as a fixed amount:
•50% is based on a global business
performance measured through the
achievement of the target EBIT of the
Company in order to link the bonus to the
operational result of the Company; and
•50% is based on an assessment of individual,
department, or site performance measured
through achievement of pre-established
targets within the criteria determined by the
CEO.
Currently no long-term incentives are foreseen for
members of the Executive Management.
The results for performance year 2022 are shown in
the table below. In 2022 the EBIT was USD 57.3 million.
This means that 43% of the short-term cash bonus that
is linked to the operational result of the Company will
be paid out. One member of the Executive
Management waived the variable remuneration for
2022.
in U.S. dollars
Performance criteria
a)
Minimum threshold
performance
a)
Maximum performance
a)
Measured performance
b)
Corresponding
remuneration
b)
Corresponding
remuneration
b)
Actual remuneration
outcome
Global business
performance
a)
2,500,000
a)
130,000,000
a)
57,335,000
Relative weighting 50%
b)
0
b)
121,240
b)
36,732
Individual/team
performance
a)
Determined individually
a)
Determined individually
a)
Determined individually
Relative weighting 50%
b)
0
b)
121,240
b)
91,198
Total bonus
0
242,480
127,931
Share-based remuneration
The remuneration policy of X-FAB does not provide
for share-based remuneration for directors or
executives.
Evolution of the remuneration and performances
of X-FAB
The table below provides an overview of the annual
change in total remuneration, developments and
performance of X-FAB, and the average remuneration
of employees.
Non-financial performance criteria are not linked to
remuneration and are therefore not reported. We refer
to section 6 of this annual report for an overview of
non-financial topics. To ensure comparability, the
annual change in remuneration is only reported since
the implementation of Directive (EU) 2017/828 as
regards the encouragement of long-term shareholder
engagement.
113
Name
2018
2019
2020
2021
2022
Annual change of remuneration (Executive
management)
•Fixed remuneration
—
—
—
-4.1%
4.2%
•Variable remuneration
—
—
—
+100%
-33.4%
•Total remuneration
—
—
—
21.3%
-2.5%
Annual change in the developments and
performances (in thousands of U.S. dollars)
•Performance criteria (EBIT)
32,919
-43,865
-14,617
77,192
57,335
•Net profit
22,554
-48,540
13,530
83,640
52,491
Annual change in the average remuneration of
employees on consolidated basis*
2.26%
-6.06%
0.91%
8.39%
-1.58%
*The average employee remuneration was calculated with the numbers as reported in notes 6.6 and 13.3 (wages and salaries) in
this annual report (personnel expenses and average number of employees). Social security, pension, and benefit costs are
excluded.
In 2022 the ratio between the highest and lowest
remuneration was 56.3 to 1. The highest remuneration
used for this comparison includes the base salary of a
member of the Executive Management. The lowest
remuneration includes the base salary as well as other
benefits such as insurance, pension contributions.
All figures are presented on an X-FAB Group
consolidated basis in the above table. Information is
provided from 2017 onwards, after X-FAB went public.
Severance payments
No severance payments were made as no contract
with a member of the Executive Management was
terminated in 2022.
Use of clawback provisions
No clawbacks were applied in 2022.
Vote of the shareholders
The remuneration report for the financial year ended
December 31, 2021, was approved at the annual
shareholders’ meeting held on April 28, 2022, with a
98.6% majority of the 75.2% validly votes cast. As the
remuneration report was approved with a large
majority and X-FAB still believes in the principles
included therein, X-FAB will retain its remuneration
policy.
7.8 Policy on certain transactions
Terms and conditions of transactions with related
parties
All related party transactions were made on terms
equivalent to those that prevail in arm’s length
transactions.
Conflicts of interest of the Board of Directors
According to Article 7:96 BCCA a member of the
Board of Directors is required to inform the other
directors about any item on the agenda of the Board
that will cause a direct or indirect conflict of interest of
a financial nature to him/her. In this event, the
respective director may not participate in the
deliberation and voting on this agenda item.
Pursuant to Article 7:97 BCCA, companies listed on the
stock exchange must follow a special procedure
before decisions are taken or operations are executed
concerning (i) the relations of the listed company with
an affiliated company, except its subsidiaries, and (ii)
the relations between a subsidiary of the listed
company and an affiliated company of the subsidiary,
other than a subsidiary of the subsidiary. Prior to the
decision or transaction, a committee composed of
three independent directors, if deemed necessary
assisted by one or more independent experts, must
prepare written advice for the Board of Directors. The
auditor delivers an opinion regarding the accuracy of
the information contained in the committee advice and
in the minutes of the Board of Directors’ decision.
The advice of the committee, an excerpt from the
minutes of meetings of the Board of Directors, and the
opinion of the auditor have to be recorded in the
annual report of the Company.
In 2022, there was a conflict of interest according to
Article 7:96 BCCA for one topic on the agenda of the
Board of Directors meeting of March 24. It concerned
the approval of the management contract of the CEO.
Please find the full excerpt of the board minutes on
this subject below.
Approval of the management agreement of the
CEO
Conflict of interest
Prior to discussing the changes to the management
agreement with Sensinnovat BV, Rudi De Winter,
permanent representative of Sensinnovat BV, director
of the Company, declares to have an interest of a
patrimonial nature which is conflicting with the decisions
that fall within the scope of the powers of the board of
directors, in respect of the changes to be made to his
management agreement with the Company (the
“Management Agreement”). This conflict of interest
results from the fact that Sensinnovat BV is a director of
the Company and a party to the Management
Agreement. The changes to the Management
Agreement will have financial consequences for the
Company as it will require the Company to pay an
increased management fee to Sensinnovat BV as
Annual Report 2022 | Corporate governance statement
114
compensation for the provision of its services under the
Management Agreement. Under Article 9 of the Council
Regulation (EC) No 2157/2001 of October 8, 2001 on
the Statute for a European company (the “SE
Regulation”) juncto Article 7:96 of the Companies and
Associations Code, a conflict of interest prevents the
directors in question from taking part in the
deliberations and from voting on the decision for which
a potential conflict of interest exists.
The board of directors took note of the changes to the
Management Agreement. Informed of the existence of
a conflict of interest with respect to this agreement, the
board of directors decided nevertheless to approve the
changes thereto. The Company requires highly qualified
specialists with extensive experience and expertise in its
field of business. The board of directors is of the opinion
that Sensinnovat BV (represented by its permanent
representative Rudi De Winter) has clearly evidenced
these skills over the past years. The fee has, however,
remained unchanged and is therefore no longer in line
with market standards. The board of directors has
concluded that the changes to the Management
Agreement (i.e. the increase of the management fee)
are in the interest of the Company, given that, even
though it involves the increased payment by the
Company to Sensinnovat BV of a management fee,
those management fees are proportionate for the
services to be provided by this manager to the
Company. The board resolved that the changes to the
Management Agreement are approved in the form
presented to the board of directors.
Other transactions with directors and Executive
Management
As determined by section 6 of the X-FAB Corporate
Governance Charter, members of the Board of
Directors should arrange their personal and business
affairs in such a way as to avoid conflicts with X-FAB.
Moreover, the members of the Board of Directors and
the Executive Management are not permitted to enter,
either directly or indirectly, into agreements with
X‑FAB or any of its subsidiaries for the provision of
paid services or goods, unless explicitly authorized by
the Board of Directors. Such agreements must always
be at arm’s length. Please refer to note 12 on related
party transactions.
In 2022, there were no transactions between the
Company and its directors or Executive Managers
involving a conflict of interest.
Insider trading
In compliance with the 2020 Belgian Code on
Corporate Governance and EU regulation on market
abuse (EU No. 596/2014) the X-FAB Insider Trading
Policy was updated and approved by the Board of
Directors in 2020.
X-FAB complies with the Belgian provisions on insider
trading and market abuse. In this respect a list is kept
up to date of all people with managerial responsibilities
as well as all other people who have access to sensitive
information which could have an effect on the share
price.
The purpose of the X-FAB Insider Trading Policy is to
prevent the abuse of inside information. Before trading
any company shares, the members of the Board and
the Executive Management have to receive the green
light from the Compliance Officer and have to report
back once the transaction has been completed.
Furthermore, the members of the Board and the
Executive Management as well as their closely
associated persons have to notify all their transactions
above a certain threshold in X-FAB shares to the
Belgian Financial Services and Markets Authority, which
will publish these notices on its website.
Compliance with the X-FAB Insider Trading Policy will
be supported and verified by the Compliance Officer.
7.9 Internal control and risk assessment
procedures in relation to financial reporting
The internal control and risk assessment procedures in
relation to the process of financial reporting are
coordinated by the CFO. Such procedures are in place
to ensure that the financial reporting is based on
reliable information and that the continuity of the
financial reporting in conformity with the IFRS
accounting principles is guaranteed.
The process of internal control in relation to the
financial reporting is based on the following principles:
•Data on transactions or use of assets of the
Company are registered accurately and saved in an
automated global enterprise resource planning
(ERP) system by the different X-FAB business
units.
•Accounting transactions are registered in globally
standardized operating charts of accounts.
•The financial information is prepared and reported
in first instance by the accounting teams in the
different legal entities of X-FAB worldwide.
•Consequently, the finance managers at the
different X-FAB sites will review the prepared and
reported local financial information before sending
it to the Global Finance Department.
•In the Global Finance Department, the financial
information will receive its final review before it is
included in the consolidated financial statements.
X-FAB is validly represented by the sole signature of
the CEO for all aspects within and outside the daily
management of the Company. Specific powers are
granted to members of the Executive Management to
represent X-FAB in matters that relate to the
functional area for which they are responsible. For
actions that fall outside the scope of the daily
management, the Company is validly represented by
two directors acting together.
115
In the event of the detection of certain deficiencies,
this will be reported to the Executive Management to
determine which appropriate measures can be taken.
The risk assessment in connection with the financial
reporting is based on the following principles:
•Risks that the Company is confronted with are
detected and monitored by the responsible
persons of the different departments of the
Company.
•The automated ERP system provides the
responsible persons of the departments with
permanent access to the financial information
relevant to the business activities of their functional
area for monitoring, controlling, and directing
purposes.
•Closing the accounts at the end of every month
warrants that the financial consequences of the
identified risks are monitored closely to be able to
anticipate to possible adverse evolutions.
•The financial results are also reviewed monthly on a
global level.
•A data protection system based on antivirus
software, internal and external backup of data, and
the controlling of access rights to information
protects the Company’s information and
guarantees the continuity of the financial reporting.
The adequacy and integrity of these IT systems
and procedures are reviewed regularly.
•In accordance with the 2020 Belgian Code on
Corporate Governance, X-FAB has set up an
internal audit function for its financial department,
whose resources and skills are adapted to assess
the financial reporting and the risk management of
the Company. The Audit Committee receives a
periodic summary of the internal audit activities.
7.10 Description of certain information from
the Articles of Association and elements
pertinent to a takeover bid
Capital structure
The registered capital of X-FAB amounts to
EUR 657,456,850.68 and is represented by
130,781,669 equal shares without par value. The shares
are in registered or dematerialized form.
Restrictions on the transfer of securities
The Articles of Association contain no restrictions on
the transfer of the shares. The Board of Directors is
furthermore not aware of any restrictions imposed by
law on the transfer of shares by any shareholder,
except in the framework of market abuse regulations.
Restrictions on the exercise of voting rights
Each share entitles the holder to one vote. The Articles
of Association contain no restrictions on the voting
rights and each shareholder can exercise their voting
rights provided they are validly admitted to the general
meeting and their rights have not been suspended.
Pursuant to Article 11 of the Articles of Association the
Company is entitled to suspend the exercise of the
rights attaching to securities belonging to several
owners until one person is appointed towards the
Company as representative of the security.
No one can vote at the general meeting using voting
rights attached to securities that have not been
reported in due time in accordance with the Articles of
Association and with the law.
The Board is not aware of any other restrictions
imposed by law on the exercise of voting rights.
Agreements among shareholders
XTRION NV and Sarawak Technology Holdings Sdn.
Bhd. have entered into a shareholders’ agreement as
shareholders of X-FAB (the “Shareholders’
Agreement”).
The Shareholders’ Agreement applies for as long as
each of the shareholders holds more than 5% of the
shares in X-FAB. The Shareholders’ Agreement
addresses certain matters relating to the governance
of X-FAB as well as the transfer of shares in X-FAB
held by the parties to this Shareholders’ Agreement.
Pursuant to the terms of the Shareholders’ Agreement,
XTRION NV and Sarawak Technology Holdings Sdn.
Bhd. each have the right to appoint two directors on
the Board of Directors. The Shareholders’ Agreement
furthermore provides for certain restrictions on the
ability of XTRION NV and Sarawak Technology
Holdings Sdn. Bhd. to transfer their shares in X-FAB.
Amendments to the Articles of Association
Matters involving special legal quorum requirements
include, among others, amendments to the Articles of
Association, issues of new shares, convertible bonds, or
warrants, and decisions regarding mergers and
demergers, which require at least 50% of the share
capital to be present or represented. If the quorum is
not reached, a second meeting may be convened at
which no quorum shall apply.
Matters involving special majority requirements
include, among others, decisions regarding mergers
and demergers, which require a majority of at least 75%
of the votes cast.
Authorities of the Board to issue, buy back, or
dispose of own shares
The Articles of Association foresee that the Board of
Directors may increase the registered capital of the
Company in one or several times by a (cumulated)
amount of maximum EUR 657,456,850.68. Such
authorization may be renewed in accordance with the
relevant legal provisions. The Board of Directors may
exercise this power for a period of five (5) years as
from the date of publication in the Annexes to the
Belgian State Gazette of the amendment to these
Annual Report 2022 | Corporate governance statement
116
Articles of Association approved by the Shareholders’
Meeting on April 28, 2022.
The Board of Directors is further authorized by
Article 13 of the Articles of Association to acquire own
shares in the Company, either directly, by a person
acting in his/her own name on behalf of the Company,
or by a direct subsidiary within the meaning and the
limits set out by Article 7:221 BCCA, under the following
conditions:
•This authorization applies for a number of own
shares, profit-sharing certificates, or associated
certificates that is at most equal to that which, after
acquisition, results in a total number of own shares
held by the Company equal to the set limit of 20%
as stipulated in Article 5 of the SE Regulation juncto
Articles 7:215 ff. BCCA.
•Under this authorization a share should be acquired
at a price that will respect the legal requirements,
but that will in any case not be more than 10% below
the lowest closing price in the last 30 trading days
preceding the transaction and not more than 5%
above the highest closing price in the last 30
trading days preceding the transaction.
•This authorization is valid for five years from
April 28, 2022.
By resolution of the Shareholders’ Meeting held on
April 28, 2022, the Board of Directors is authorized to
divest itself of part of or all the Company’s shares,
profit-sharing certificates, or associated certificates.
•This can be done at any time and at a price it
determines, on or outside the stock market or in
the framework of its remuneration policy, to
personnel within the meaning of article 1:27 BCCA
or to prevent any serious and imminent harm to the
Company.
•The authorization covers the divestment of the
Company’s shares, profit-sharing certificates, or
associated certificates by a direct subsidiary within
the meaning of Article 7:221 BCCA.
•The authorization is valid without any time
restriction, except when the divestment is to
prevent any serious and imminent harm, in which
case the authorization is valid for three (3) years
from the date of publication of the authorization in
the Annexes to the Belgian State Gazette (May 2,
2022).
Authorities of the Board to proceed with a capital
increase
As per the Articles of Association, the Board of
Directors was expressly empowered to proceed with a
capital increase in any and all forms, including but not
limited to a capital increase accompanied by the
restriction or withdrawal of the preferential
subscription rights, even after receipt by the Company
of a notification by the Financial Services and Markets
Authority (FSMA – “Autoriteit voor Financiële Diensten
en Markten”/“Autorité des Services et Marchés
Financiers”) of a takeover bid for the Company‘s
shares. Where this is the case, however, the capital
increase must comply with the additional terms and
conditions laid down in Article 5 of the SE Regulation
juncto Article 7:202 BCCA. The powers conferred on
the Board of Directors remain in effect for a period of
three (3) years from the date of the amendment to the
Articles of Association approved by Shareholders’
Meeting held on April 28, 2022. These powers may be
renewed for a further period of three years by
resolution of the Shareholders’ Meeting, deliberating
and deciding in accordance with applicable rules. If the
Board of Directors decides upon an increase of
authorized capital pursuant to this authorization, this
increase will be deducted from the remaining part of
the authorized capital.
Other elements
The Company has not issued securities with special
control rights.
No agreements have been concluded between the
Company and its directors or employees providing for
compensation if, as a result of a takeover bid, the
directors should resign or are made redundant without
valid reason or if the employment of the employees is
terminated.
7.11 Auditor
KPMG Bedrijfsrevisoren BV, whose registered office is
situated at 1930 Zaventem, Luchthaven, Brussel
Nationaal 1K, was appointed as statutory auditor of the
Company. Mr. Jos Briers, auditor, was appointed as the
permanent representative of the auditor.
The audit fee for the audit of the consolidated financial
statements amounted to USD 450,000, excluding
value-added taxes. Additional fees were charged in
2022 for other services amounting to USD 27,000,
excluding value-added taxes. Non-audit related
services mainly relate to certification engagements
and tax compliance services.
117
7.12 Compliance with the 2020 Belgian Code
on Corporate Governance
X-FAB complies with the principles of the Code 2020.
In view of the “comply-or-explain” principle of the
Code the following overview sets out those provisions
of the Code that X-FAB does not comply with, along
with an explanation of the reasons for non-compliance:
•Contrary to recommendation 7.9 of the Code
2020, the members of the Executive Management
are not required to hold a minimum threshold of
shares in the Company. Further, the Company does
not grant shares, options, or other rights to acquire
shares to its members of the Executive
Management. However, it should be noted that the
CEO is an important shareholder of the Company.
The Board of Directors believes that the stock
price of a company does not always correctly
reflect the performance of that company since
there are many external factors that also have an
influence on the price of a financial instrument. The
financial numbers that impact the level of the
business component of the variable remuneration,
i.e. the EBIT target, are a more important element
driving the valuation of the Company. As such, the
directors believe there is a clear alignment between
shareholders on the one hand and management on
the other.
•Contrary to recommendation 7.6 of the Code
2020 for non-executive directors, the directors do
not receive shares in the Company as part of their
remuneration. The purpose of the
recommendation is to better align the interests of
non-executive directors with regard to long-term
shareholder interest. At X-FAB, that long-term
shareholder perspective is sufficiently represented
on the Board of Directors since the CEO as well as
one director are important (indirect) shareholders
of the Company.
Annual Report 2022 | Corporate governance statement
118
119
120
121
8. SHAREHOLDER
INFORMATION
Shareholder structure
NUMBER OF
SHARES
SHARE IN %
XTRION NV
63,333,563
48.4
Sarawak Technology Holdings Sdn. Bhd.
14,948,655
11.4
Public
52,499,451
40.1
TOTAL
130,781,669
100.0
Total number of votes: 130,781,669
Share information
First day of listing:
April 6, 2017
Stock exchange:
Euronext Paris
Ticker:
XFAB
ISIN:
BE0974310428
Number of shares outstanding on December 31, 2022:
130,781,669
Market capitalization on December 31, 2022:
EUR 865,774,648.78
Annual Report 2022 | Shareholder information
122
Financial calendar
April 27, 2023
Publication of Q1 2023 results
Annual shareholders’ meeting
June 8, 2023
X-FAB Investor Day 2023
July 27, 2023
Publication of Q2 2023 results
September 5, 2023
Publication of Half-Year Report 2023
October 26, 2023
Publication of Q3 2023 results
Contact information
X-FAB Silicon Foundries SE
Investor Relations
Transportstraat 1
3980 Tessenderlo
Belgium
Phone: +32 1361 3627
Web: www.xfab.com
123
9. X-FAB SILICON FOUNDRIES
SE STATUTORY ACCOUNTS
The separate financial statements of X-FAB Silicon
Foundries SE, the Group’s parent, have been audited in
accordance with Belgian statutory requirements. The
auditor’s report is unqualified and certifies that the
financial statements have been prepared in
accordance with Belgian GAAP, and that they give a
true and fair view of the financial position and results of
X-FAB Silicon Foundries SE in accordance with all legal
and regulatory requirements.
The separate financial statements, together with the
separate management report of the board of directors
to the general assembly of shareholders as well as the
auditor’s report thereon, will be filed with the National
Bank of Belgium in accordance with the relevant
statutory filing due dates. In addition, they are available
on the Company’s website or can also be obtained on
request at the registered office of the company at
Transportstraat 1, 3980 Tessenderlo.
The separate financial statements are reproduced
below in condensed form.
The condensed statutory financial statements of
X‑FAB Silicon Foundries SE are presented in
thousands of EUR as the functional currency of the
statutory accounts is the EUR.
Participations in affiliated companies are recognized at
their acquisition cost.
Condensed non-consolidated statement of profit and loss
For the year ended December 31
in thousands of EUR
2022
2021
Operating income
Turnover
13,016
11,775
Operating charges
Cost of services and other expenses
(13,106)
(11,650)
Wages and salaries, social security costs and pension costs
(135)
(105)
Depreciation
(4)
(8)
Operating profit
(229)
12
Finance income
Income from financial fixed assets
14,848
56,371
Income from current assets
—
—
Other financial income
2,040
1,015
Finance costs
Debt charges
(53)
(19)
Other financial charges
(87)
—
Net financial result
16,748
57,367
Profit before taxes
16,519
57,379
Income tax
(414)
(316)
Profit for the period
16,105
57,063
Annual Report 2022 | X-FAB SE statutory accounts
124
Condensed non-consolidated statement of financial position
in thousands of EUR
December 31,
2022
December 31,
2021
ASSETS
Fixed assets
Other equipment
5
9
Financial assets
Affiliated companies
Investments in affiliates
927,250
927,250
Loans issued to affiliated companies
—
239
Total fixed assets
927,255
927,498
Current assets
Amounts receivable within one year
Other receivables
18,100
60,409
Cash and cash equivalents
70,097
16,133
Accruals and deferred income
8
8
Total current assets
88,205
76,550
Total assets
1,015,460
1,004,048
EQUITY AND LIABILITIES
Equity
Capital
Share capital - issued
657,457
657,457
Share premium
92,902
92,902
Reserves
Legal reserves
13,207
12,402
Reserve for treasury shares
562
562
Accumulated profits
250,201
234,900
Total equity
1,014,329
998,223
Current liabilities
Amounts payable within one year
Trade payables
198
589
Other current liabilities
621
5,133
Taxes
312
44
Accrued charges and deferred income
—
59
Total current liabilities
1,131
5,825
Total equity and liabilities
1,015,460
1,004,048
125
10. RISK FACTORS
An investment in shares involves risks and
uncertainties. Prior to making a decision to invest in
shares of X-FAB, the information provided in this
annual report and, in particular, the risks and
uncertainties described below should be read and
considered carefully. The occurrence of any of these
risks could adversely affect the Company’s business,
results of operations, and/or financial condition.
Risks relating to X-FAB’s business and the
semiconductor industry
Structural trends in the markets for the end-user
products produced by X-FAB’s customers, or
material volatility in demand for these products,
may limit X-FAB’s ability to maintain or increase
sales and profit levels.
A significant portion of X-FAB’s revenues is derived
from customers who use ICs manufactured by the
Group as components for the production of a wide
range of products including automotive, industrial,
medical, and communications devices. If consumer
demand for these products is volatile, or past and
expected structural growth trends in these industries
do not continue, it may lead to reduced demand for
X-FAB’s analog/mixed-signal ICs.
A global systemic economic or financial crisis,
increased political uncertainty, or increased
economic protectionism could negatively affect
X-FAB.
X-FAB’s business is subject to inherent and indirect
risks arising from general and sector-specific economic
conditions in the markets in which it operates. In recent
years, several major systemic economic and financial
crises and events leading to political uncertainty have
negatively affected global business conditions, the
semiconductor industry, and a variety of consumer and
industrial markets. X-FAB’s protection against
downturns is limited, since a substantial majority of
customer contracts do not contain minimum order
requirements, and as a result any decline or slow GDP
growth, whether caused by political uncertainty,
changes in trade regulation, or broader economic
conditions, which leads to reduced consumer and
industrial spending, may adversely impact X-FAB’s
customers and result in lower demand for its analog/
mixed-signal ICs.
A significant portion of X-FAB’s revenue comes
from a relatively limited number of customers, with
its largest customer being a related party.
X-FAB’s largest customer, Melexis, accounted for 40%
of the Group’s revenue in 2022, while the Group’s top
three customers accounted for 47% of revenue and its
top five customers accounted for 52% of revenue
during the year. None of X-FAB’s customers are
prohibited by contract from purchasing from other
semiconductor suppliers. In the past, customers have
switched to other semiconductor suppliers with little or
no notice, or have notified the Group that they would
source semiconductors for new end-user products
from other semiconductor manufacturers. Changes in
X-FAB’s relationships with its top customers, the loss
of one or more of these customers, or a change in the
competitive position of any of these customers could
have a material adverse impact on X-FAB. Further,
Melexis is a related party, as it is controlled by X-FAB’s
largest shareholder, XTRION (which is beneficially
owned by Roland Duchâtelet, Rudi De Winter, and
Françoise Chombar, and the permanent
representative of X-FAB’s CEO, Rudi De Winter, is
married to Françoise Chombar who served as the CEO
of Melexis until the end July 2021 and is currently chair
of the board of directors of Melexis. Conditions of the
commercial relations between X-FAB and Melexis are
in line with those that would have been agreed upon
between independent parties in comparable
circumstances. The arm’s length character of these
conditions are analyzed, determined, and tested in
accordance with the principles and best practices in
this respect as detailed in the OECD’s 2017 Transfer
Pricing Guidelines for Multinational Enterprises and Tax
Administrations. Notwithstanding due care taken in the
Group’s transfer pricing analyses, there can be no
assurance that the tax authorities or courts will not take
a position contrary to the Group’s position.
Due to X-FAB’s relatively fixed-cost structure, its
ability to grow profitability is dependent on its
ability to maintain appropriate utilization levels.
The profitability of X-FAB’s operations is closely tied to
its level of utilization. X-FAB’s ability to improve or
maintain utilization levels depends, among other things,
on the general economic environment, the success of
its major customers, and its ability to offer the
technologies and processes required for it to stay
competitive. Failure to maintain or improve utilization
levels could have a material adverse impact on X-FAB.
X-FAB faces difficulties in forecasting demand and
may therefore be unable to match its production
capacity to demand.
Difficulties in projecting future business levels make it
more difficult to reach and to maintain optimal
utilization levels and adequately predict capacity needs
across X-FAB’s operations. Because customers usually
place orders on a short-term basis, X-FAB may face
difficulties to predict demand accurately. Significant
capacity problems or inability or delay in shifting
production to another fab could harm X-FAB’s
relationships with its customers and lead to lost sales.
Furthermore, small changes in sales at the OEMs may
trigger inventory corrections throughout the supply
chain. As it can take about ten months from placing an
order at X-FAB to assembling the final product at the
Annual Report 2022 | Risk factors
126
OEM, a small variation in sales combined with a
negative or positive market segment growth could
cause overreactions in the supply chain that amplify
the effects on X-FAB’s operations, since X-FAB is at
the end of the supply chain.
X-FAB may be unsuccessful in its attempts to
increase its production capacity and capabilities.
As part of its strategy to expand capacity, X-FAB
intends to expand capabilities and capacity at the
Group’s existing sites. This depends on the timely
availability of equipment as well as the ability to install
and qualify such new equipment on a timely basis.
Although X-FAB does not have any current targets for
future acquisitions, the Group may acquire additional
companies or production sites over the medium term.
X-FAB may also seek to grow its production capacity
through the development of new manufacturing sites.
Failure to integrate any acquired company, fab, or
technology successfully, or to achieve desired
synergies, may inhibit X-FAB’s future expansion.
X-FAB may not realize all the anticipated benefits
from its acquisition of Altis’ core business.
X-FAB acquired the Altis assets in 2016, including a fab
located in Corbeil-Essonnes, France. The integration
process includes a series of technology introductions,
capacity enhancements, adoptions of Group-wide
systems, and implementation of cost-efficiency
measures. X-FAB may encounter delays or
interruptions in this integration process, among others
due to delays in customer qualifications in the fab or a
need to make additional capital expenditures. There
can be no assurance that this integration will be
successful, that X-FAB will meet targeted synergies or
financial returns at the new facility, or that X-FAB will
be able to keep all existing customers to secure
satisfactory fab utilization during the business
transition.
X-FAB’s expectations of an increase in market
share by foundries might not occur.
A key component of X-FAB’s strategy is its belief that
the market for foundries will grow, due to increased
outsourcing of specialty technologies by IDMs and
increasing prevalence of fabless companies. Although
this trend has been prevalent in the digital IC market, it
may not develop to the same extent in the market for
specialty technologies. If increasing market growth for
foundries were to slow or reverse, it could have a
material adverse impact on X-FAB.
X-FAB may face increasing competition.
Although X-FAB operates in a narrow market segment
within the broader semiconductor manufacturing
industry, the Group faces competition from other
semiconductor producers, some of which have greater
manufacturing, financial, research and development,
and marketing resources than X-FAB does. In the long
term, these competitors may win a higher portion of
new customers than X-FAB, or win existing customers
from X-FAB. If X-FAB cannot provide the same level
of design and engineering support, capacity, or
advanced capabilities as competitors, it may have a
material adverse effect on X-FAB.
X-FAB may face competitive pricing pressures.
Competitors may have an impact on X-FAB’s selling
prices and demand for its services. Although X-FAB
has not experienced significant pricing pressure in the
past, there can be no assurance this will be the case in
the future. Significant declines in average selling prices
(ASPs) could have a material adverse effect on X-FAB.
X-FAB may face price increases from its suppliers.
X-FAB manufactures analog/mixed-signal ICs, utilizing
proprietary process technologies and third-party
silicon wafers and other raw materials. Changes in the
availability or prices of such wafers, raw materials,
electricity, spare parts, etc. can have an effect on the
operating margin if the additional costs cannot be
included in the prices for X-FAB’s own customers.
In 2022, raw wafer costs accounted for 13% of total
cost of sales. For most raw wafer types, X-FAB uses
more than one supplier to secure availability of
required volumes but also to remain flexible. However,
having several suppliers per wafer type also means a
greater effort to acquire the necessary qualifications
for these suppliers.
X-FAB may be subject to penalties if it fails to meet
the terms of long-term contracts with customers
and suppliers.
X-FAB has concluded long-term agreements with a
number of customers and suppliers. Long-term
contracts with customers include take-or-pay
arrangements which specify agreed wafer quantities
and prices for a customer’s business with X-FAB over a
period of three years. Such arrangements provide
X‑FAB with a better overview of its future business
levels. However, should X-FAB be unable to deliver the
agreed quantities of wafers on time, it will be subject to
penalty payments. In a similar manner, long-term
procurement contracts with suppliers include take-or-
pay arrangements and X-FAB may be subject to
penalties if it does not purchase the agreed quantities
from suppliers under such contracts.
X-FAB's operations could be disrupted by an
unreliable or insufficient power supply.
Reliable power supply is essential to maintain a wafer
fabrication facility. Unscheduled interruptions can
cause significant damage to work in progress (WIP)
and equipment. In addition, in times of increased
geopolitical tensions and global competition for scarce
resources, the energy supply in some regions may
become inadequate.
X-FAB is subject to risks associated with currency
fluctuations.
X-FAB records its financial results in U.S. dollars but
receives revenues and incurs costs in a variety of
currencies, including euros and Malaysian ringgit.
Changes in the exchange rate of the U.S. dollar to the
euro or Malaysian ringgit could result in translational
losses in a given year, as compared to prior operating
127
periods, or in a mismatch between local currency
expenses and U.S. dollar revenues. X-FAB strives for a
natural hedging of the business, which would make
X‑FAB’s profitability development largely independent
from exchange rate fluctuations; however, this may not
be effective in preventing exchange rate losses.
Price, credit, liquidity, and cash flow risks and risks
associated with the use of financial instruments are
described in note 10 to the X-FAB consolidated
financial statements in chapter 5.
X-FAB is subject to risks associated with any form
of cyber criminality.
X-FAB’s operations may be disrupted due to the
unauthorized use or theft of critical data as well as
sabotage, viruses, or any other malicious activity
targeted at the Company’s IT infrastructure. This could
have an impact on the confidentiality, integrity, and
availability of data and/or IT systems of the Company.
X-FAB has taken measures to make the Company’s IT
infrastructure robust and secure and has implemented
state-of-the-art security and control frameworks and
technology. Any significant interruption or failure of
X‑FAB’s IT systems or any significant breach of
security could have an adverse effect on the
Company’s business, operational results, financial
condition, and cash flows.
X-FAB is also subject to the following risks:
•X-FAB depends on successful technological
advances.
•X-FAB depends on successful materials,
machinery, and component procurement for its
manufacturing processes.
•X-FAB’s business may temporarily be negatively
impacted due to disruptions in the supply chain or
market demand caused by a pandemic or epidemic.
•X-FAB may be unable to recruit or retain the
personnel required for its growth strategy.
•X-FAB may be affected by reductions in
government subsidies and grants and could fail to
comply with the conditions and obligations under
such subsidy programs.
•Industry studies, forecasts, and growth rates
relating to the semiconductor market as a whole
may not be indicative of X-FAB’s operations within
the analog/ mixed-signal semiconductor market.
•X-FAB’s ability to compete successfully and
achieve future growth will depend, in part, on its
ability to protect its proprietary technology.
•X-FAB may be subject to claims for alleged
infringement of third parties’ intellectual property
rights.
•X-FAB depends on intellectual property rights of
third parties, and failure to maintain or acquire
licenses could harm the Group’s business.
•X-FAB could be adversely affected by
manufacturing interruptions.
•X-FAB’s business could be adversely affected by
changes in export control regulations, trade
restrictions, and economic sanctions.
•If X-FAB experiences difficulty in achieving
acceptable device yields or process performance
as a result of manufacturing problems, it could
result in delayed deliveries.
•X-FAB’s insurance coverage may not be adequate
to compensate for any interruptions or loss of
business.
•X-FAB’s operations may be impacted by
disruptions both at its own or its suppliers’
operations caused by severe weather conditions
whose occurrence is increasing due to climate
change.
•X-FAB could incur material costs to comply with
regulation, including environmental and health and
safety laws, especially as a result of climate change.
Changes in such regulations could require
significant changes in the production process or
could even require purchasing additional
equipment.
•X-FAB may be subject to litigation, disputes, or
other legal proceedings.
•X-FAB carries a significant amount of deferred tax
assets on its balance sheet.
•Low or negligible employee motivation as well as
the occurrence of accidents due to human failure
may negatively impact X-FAB’s business.
•Cultural differences may lead to misalignment
among X-FAB sites, negatively impacting X-FAB’s
business.
•X-FAB may be subject to penalty payments if labor
rights or environmental provisions are being
violated.
•X-FAB’s public image may be adversely affected
based on the impact of its business on the
environment.
Risks related to the shares
•The interests of X-FAB’s principal shareholder may
not necessarily be aligned with X-FAB’s interests or
the interests of the holders of the shares.
•Future sales of substantial amounts of X-FAB’s
ordinary shares, or the perception that such sales
could occur, could adversely affect the market
value of the shares.
•X-FAB may not be able to pay dividends.
Annual Report 2022 | Risk factors
128
•Investors with a reference currency other than
euros will become subject to foreign exchange rate
risk when investing in shares.
•Any sale, purchase, or exchange of shares may
become subject to financial transaction tax.
•Certain provisions of the Belgian Companies and
Associations Code and the Articles of Association
may affect potential takeover attempts and may
affect the market price of the shares.
Forward-looking information
This annual report may include forward-looking
statements. Forward-looking statements are
statements regarding or based upon management’s
current intentions, beliefs, or expectations relating to,
among other things, X-FAB’s future results of
operations, financial condition, liquidity, prospects,
growth, strategies, or developments in the industry in
which it operates. By their nature, forward-looking
statements are subject to risks, uncertainties, and
assumptions that could cause actual results or future
events to differ materially from those expressed or
implied thereby. These risks, uncertainties, and
assumptions could adversely affect the outcome and
financial effects of the plans and events described
herein.
Forward-looking statements contained in this annual
report regarding trends or current activities should not
be taken as a report that such trends or activities will
continue in the future. We undertake no obligation to
update or revise any forward-looking statements,
whether as a result of new information, future events,
or otherwise, unless legally required. You should not
place undue reliance on any such forward-looking
statements, which speak only as of the date of this
annual report.
The information contained in this annual report is
subject to change without notice. No re-report or
warranty, express or implied, is made as to the fairness,
accuracy, reasonableness, or completeness of the
information contained herein, and no reliance should
be placed on it.
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11. GLOSSARY
AEC
Automotive Electronics Council
AI
Artificial intelligence
AIM
Automotive, industrial, medical
Analog M/S
Analog mixed-signal
B2B
Business to business
BCCA
Belgian Code on Companies and Associations
BCD
Bipolar-CMOS-DMOS
Belgian Companies Code
The Belgian Act of May 7, 1999 containing the Companies Code as
amended from time to time
Belgian GAAP
Belgian generally accepted accounting principles, which refers to
the financial reporting framework applicable in Belgium
BMS
Battery management system
CAGR
Compound annual growth rate
CCC
Consumer, communications, computer
CDA
Clean dry air
CMOS
Complementary metal-oxide-semiconductor
Company
X-FAB Silicon Foundries SE
DNA
Deoxyribonucleic acid
DTI
Deep trench isolation
EBIT
Earnings before net finance cost and income taxes, which is
equivalent to operating profit, as presented in the historical
financial information
EBITDA
Earnings before net finance cost, income taxes, depreciation, and
amortization.
ECL
Expected credit loss
EDA
Electronic design automation
EHS
Environmental, Health and Safety
ERP
Enterprise resource planning
ESEF
European Single Electronic Format
ESG
Environmental, social, governance
EU
The European Union
EUR, euros, or €
The common currency of the EU member states that are part of
the Eurozone
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Fab
Wafer fabrication facility
FSMA
The Belgian Financial Services and Market Authority
FTE
Full-time equivalent
FVOCI
Fair value through other comprehensive income
FVTPL
Fair value through profit or loss
GDP
Gross domestic product
GHG
Greenhouse gases
GRI
Global Reporting Initiative
GVG
X-FAB Dresden Grundstücks-Vermietungsgesellschaft mbH & Co.
KG
GWh
Gigawatt hours
IAASB
International Auditing and Assurance Standards Board
IATF
International Automotive Task Force
IC
Integrated circuit
ICC
International Chamber of Commerce
IDM
Integrated device manufacturer
IFRS
International Financial Reporting Standards as adopted by the
European Union
IoT
Internet of things
IP
Intellectual property
ISAs
International Standards on Auditing
KW
Kilowatt
LTA
Long-term agreement
MCU
Microcontroller unit
MEMS
Micro-electro-mechanical systems
MES
Manufacturing execution system
METIS
Microelectronics training, industry and skills
MFI
X-FAB MEMS Foundry Itzehoe GmbH
M-MOS
M-MOS Semiconductor Sdn. Bhd.
MW
Megawatt
NRE
Non-recurring engineering
NVM
Non-volatile memory
OCI
Other comprehensive income
OECD
Organization for Economic Cooperation and Development
OEM
Original equipment manufacturer
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PCM
Process control monitoring
PDK
Process design kit
PDP
Photon detection probability
PMP
Performance management process
REACH
Registration, Evaluation, Authorization, and Restriction of
Chemicals
RF
Radio frequency
PFC
Perfluorinated carbons
RMA
Responsible Mining Alliance
RoHS
Restriction of the use of certain hazardous substances
RPA
Robotic process automation
SCAR
Supplier corrective action request
SE Regulation
Council Regulation (EC) No 2157/2001 of October 8, 2001 on the
Statute for a European company (SE)
SiC
Silicon carbide
SiP
System in package
SOI
Silicon-on-insulator
SPAD
Single photon avalanche photodiode
STEM
Science, technology, engineering and mathematics
TSV
Through-silicon via
VDA
German Association of the Automotive Industry
WSPM
Wafer starts per month
X-FAB SE, or the Company
X-FAB Silicon Foundries SE
X-FAB SE Group, or the Group
X-FAB Silicon Foundries SE together with its subsidiaries
X-FAB GmbH
X-FAB Semiconductor Foundries GmbH
X-FAB Dresden
X-FAB Dresden GmbH & Co. KG and X-FAB Dresden
Verwaltungs-GmbH
X-FAB France
X-FAB France SAS
X-FAB Texas
X-FAB Texas Inc.
X-FAB Sarawak
X-FAB Sarawak Sdn. Bhd.
X-FAB Japan
X-FAB Japan K.K.
XMF
X-FAB MEMS Foundry GmbH
ZVEI
Electrical Industry Association, Germany
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