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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 ..........................
7.3Inventories ....................................
Annual Report 2021 | Contents
2
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 .....................................................
6.1.1Stakeholder engagement ...........
6.1.2  The Covid-19 pandemic ..............
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 to submit to you the
annual report for the year ended December 31, 2021,
which has been prepared in accordance with articles
3:6 and 3:32 of the Belgian Code on Companies and
Associations (BCCA).
Another turbulent year lies behind us, again filled with
lots of challenges, though quite different to the year
before. The coronavirus pandemic continued to have
an impact on our lives, but with the vaccines that had
become available we were fortunate to have an
efficient means of reducing the spread of the virus as
well as the individual risk of a severe Covid-19 infection.
I am grateful for everyone’s contribution in containing
the pandemic by complying with the pandemic-related
code of conduct and by getting vaccinated. Thanks to
the exemplary behavior of our employees across all
sites there have been no coronavirus outbreaks at     
X-FAB. Given the unprecedented demand we
experienced during the entire year, this was all the
more important.
In 2021, X-FAB recorded revenues amounting to
USD 657.8 million, which is an increase of 38%
against the previous year and an all-time high in the
Company’s history. Revenues in our core markets –
automotive, industrial, and medical – came in at
USD 525.1 million, up 43% against 2020. Growth was
mainly driven by the accelerating electrification in
automotive and industrial, which pushed the demand
for X-FAB’s silicon carbide technology as well as
supporting applications required in electric vehicles.
The pandemic as a catalyst for the widespread use of
digital health care led to an increased demand for fast
and reliable testing as well as point-of-care devices to
the benefit of X-FAB’s medical business.
Annual automotive revenues came in at USD 331.7
million, a 41% increase compared to the previous year.
The electrification of mobility is accelerating, which has
been a major growth driver for X-FAB’s automotive
business. Not only did global electric vehicle sales
almost double in 2021, the electronic content of
electric vehicles is also three times as high compared
to internal combustion engine cars. We are offering the
full range of technologies required: from SiC to high-
voltage CMOS and on-chip high-voltage isolation. With
this, X-FAB is spot on to benefit from the transition to
electric mobility in the long term.
The need for sustainable energy also fueled growth in
industrial with applications ranging from smart
metering to power conversion and charging
infrastructure. Additionally, our expertise in sensing,
transmitting, and actuating is strongly in demand due
to megatrends such as Industry 4.0 as well as the trend
to make cities and buildings smart. In 2021, we recorded
industrial revenues of USD 145.6 million, up 50% year
on year.
The strong demand for our SiC technology resulted in
a 61% growth of total SiC revenues to USD 33.8 million
in 2021. I am very pleased about the feedback we
receive from customers stating that X-FAB’s SiC line
delivers quality and yield that is clearly above industry
average. This is the perfect foundation to grow this
business further – in line with the needs of our
customers.
Annual Report 2021 | Letter to our stakeholders
4
Our medical business developed strongly and the
trend to take advantage of semiconductor
technologies for innovative medical solutions remains
unbroken. In 2021, X-FAB recorded medical revenues
of 47.9 million, up 43% against the previous year.
We support a great variety of medical applications –
from personal medical devices, such as temperature
sensors or glucose meters, to x-ray or ultrasound
applications and, finally, lab-on-a-chip devices, the
latter being the main growth driver for our medical
business. It is exciting to see what these complex
lab-on-a-chip applications are capable of:
DNA sequencing, virus or sepsis detection, allergy
testing, or cancer cell sorting – reliable, fast, and with
a high throughput. We are experiencing a digital
transformation in medicine, which will significantly
improve prevention, diagnosis, treatment, and
monitoring of diseases, and X-FAB is perfectly
positioned not only to support this change but also
to benefit from it in the long term.
The pipeline for new projects in 2021 was also well filled,
reflecting the great interest in X-FAB’s technologies.
Full-year prototyping revenue set a new record of
USD 89.3 million, which is a growth of 32% against the
previous year and an indicator for future growth.
Demand was exceptionally strong throughout the year
with full-year bookings totaling USD 868.4 million.
On the one hand, this was certainly related to the
pressure resulting from the worldwide chip shortage,
but on the other hand it shows how well we are placed
with our expertise and experience in a variety of
specialty technologies that enable solutions to respond
to the challenges of our time, first and foremost the
need for greener energy to mitigate climate change.
The huge demand throughout the year by far
exceeded what we would have been able to supply in
the short term. As a consequence, it was necessary to
allocate capacity to customers. For more than 90% of
what we produce X-FAB is the sole source, and we are
well aware of our responsibility toward our customers
who rely on us. It has therefore been of utmost
importance to ensure customers receive the minimum
quantities required to avoid supply chain disruptions.
At the same time, our focus has been on execution
excellence and productivity improvements to increase
the wafer output of our factories. This included the
elimination of production bottlenecks as well as the
hire of additional staff to manage the high order
volume. In 2021, we kicked off various investment
projects across all sites tailored to increase capacity.
Most of the new equipment ordered in 2021 will
gradually become available in the course of this year,
which will bring wafer output up significantly.
Mainly driven by strong top-line growth, profitability
improved considerably in 2021. Full-year EBITDA went
up 154% year on year with an EBITDA margin of 23.3%.
Other contributing factors were the favorable business
mix with 80% of revenues in our core markets but also
the achieved natural currency hedging of our business,
which makes X-FAB’s profitability largely independent
from exchange rate fluctuations. On the other hand,
rising costs for raw materials, spare parts, electricity,
and transportation created a headwind on profitability,
and X-FAB will pass on the increased costs due to
inflation as well as expansion activities.
The escalation of the conflict between Ukraine and
Russia has marked the beginning of 2022. We strongly
condemn the aggression and military action by
Vladimir Putin and the Russian government and
support all sanctions that are in place. While we cannot
fully exclude potential supply disruptions, we do not
expect this crisis to have a major impact on our
business. After the close of 2021, there were no other
major events that would require disclosure.
The world is faced with manifold societal challenges:
climate change, a pandemic, and growing populations,
which will have an impact on the way we live and work in
the future. While it is hard to predict where this path of
change is going to take us, it is certain that innovative
technological solutions will be at the heart of it. I take
pride in how our capabilities and expertise enable smart
solutions to tackle these challenges, and I am confident
that X-FAB is perfectly placed to continue to be a
sustainable high-growth business going forward.
My sincere thanks go to all X-FAB employees for their
dedication in meeting our customers’ needs and to our
customers, investors, and business partners for the
trust they place in us.
Best regards,
Rudi De Winter
CEO
5
Annual Report 2021 | X-FAB at a glance
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 4,000
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. And last but not least,
our values are visible everywhere in the company.
In 2021, X-FAB introduced newly designed posters
that are displayed at all sites to visualize X-FAB’s values
and to thank our employees.
Fig 3.1: Posters displayed at all sites to visualize the X-FAB
values and to thank our employees
Annual Report 2021 | Our culture
8
That’s X-FABulous!
Real people, real stories – X-FAB’s recently launched
employer branding campaign puts the Company’s
most important asset – our employees – in the
spotlight. They represent the success of the X-FAB
team and the values that they demonstrate on a daily
basis. From our website to social media to local
advertisements, across all channels you can “meet”
members of the X-FAB team from all sites with various
professional and cultural backgrounds. This not only
spurs motivation and identification internally but also
helps us to attract new talent.
X-FAB aims at being an attractive employer and a fun
company to work for – something that is never
complete. It is an ongoing effort, especially with view to
constantly changing framework conditions. As part of a
continuous improvement process, X-FAB conducted
its third Barometer employee survey in 2021. The direct
employee feedback helped to identify strengths as
well as areas for improvement that are being worked
on with dedicated global and local teams.
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 does not have its own IC products, but
manufactures them 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 25 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
proprietary 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, 250nm, 180nm, and 130nm on 200 mm wafers.
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 2021 | 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
The number of analog (including analog/mixed-
signal) semiconductors produced annually has
grown from approximately 77 billion units in 2008
(McClean Report 2011, Figure 5.1) to approximately
286.7 billion units in 2022, according to the 2022
McClean Report (Figure 17).
This increase is expected to continue for the next
five years driven by sensors and actuators (CAGR
of 12.3%), optoelectronics (CAGR of 9.2%), and
analog ICs (CAGR of 7.4%), with all of these
categories growing stronger than the overall
market with a CAGR of 7.1% (2022 McClean Report,
Figure 11).
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 2021, revenues based on X-FAB’s CMOS
technologies amounted to USD 558.5 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 130nm 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 applications, so the feature set for the 130nm
node will be extended successively and new process
nodes will be added eventually. To mention a few
examples: the current 180nm SOI technology is able to
operate voltages up to 200 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
The benefits of X-FAB’s technologies
As already mentioned, X-FAB’s 180nm SOI technology
is capable of operating at high voltages. Through
special structures on the chip, the so-called deep
trench isolation (DTI) allows driver circuits operating at
200 volts to be placed alongside sensitive amplifiers
processing low voltages of 2 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 manage-
ment systems of electric vehicles, or close to the
brakes of trucks.
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 customer and, in
the case of electric cars, a greater driving range.
2021 R&D highlights include:
•enhancement of the process dedicated to optical
sensing with different options for photodiodes for
light, with wavelengths ranging from ultraviolet
(UV) to near-infrared (NIR), supporting
applications such as proximity sensing, spectral
analysis, and optical distance measurement;
•creating Europe’s largest capacity foundry service
for integrated photonics circuits by collaborating
with Swiss-based Ligentec;
•entering into collaboration with the Leibniz Institute
for High Performance Microelectronics in Germany
to progress the development of advanced SiGe
BiCMOS technologies for optoelectronics and 5G
wireless communication systems;
•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 RF
technologies; and
•35 new patent applications and 29 patents were
granted in 2021 contributing to an overall patent
portfolio of more than 420 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 launch
products with strong unique selling propositions that
cannot be easily copied.
Annual Report 2021 | Our business
14
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 65.5 million in 2021, 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 year of production. 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
postprocessing 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
customer products utilizing one of the aforementioned
technologies are expected 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 in 2020,
X-FAB’s SiC business recorded a tremendous revenue
growth of 61% in 2021.
15
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 10%.
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.
The benefits of silicon carbide as semiconductor material
Silicon carbide enables smaller, lighter, and more
efficient systems,
saving energy and material costs and paving the
road to a more sustainable future.
SiC is a wide bandgap material. Wide bandgap
materials, such as silicon carbide, can withstand
up to ten times higher voltages than silicon and
can therefore operate higher power. It can
operate in harsh conditions and at higher
temperatures thanks to its wide bandgap
voltage and three times higher thermal
conductivity compared to silicon.
This means that the components in a system can
be packed more densely, resulting in smaller
package sizes. Another benefit is the reduction
of system costs by reducing the number or size
of components, such as magnetic or cooling
elements for a given power level. SiC enables
energy conversion systems with exceptionally
high power densities. These systems achieve
high efficiencies that have not previously been
reached at high frequencies.
Annual Report 2021 | Our business
16
Customers can rely on the supply chain X-FAB has
established for its entire foundry business over nearly
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 33.8
million, a 61% growth compared to the previous year, as
more customers started volume production. Five new
customers were gained in 2021. 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 420 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 420 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. At the same time, it tends to serve
many more customers at any given point in time,
including start-ups, often helping them to realize highly
innovative product concepts with prototyping or very
small early-volume production. 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.
17
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
move products to other foundries.
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.
Fig. 4.5: Illustrative lifecycle for automotive: Analog/mixed-signal products are much more specialized for their applications and are
used for many years
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 20 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
X-FAB’s strategic markets
X-FAB serves the markets for automotive, industrial,
and medical (AIM) applications and supplies
successfully into the market for consumer,
communications, and computer (CCC) products.
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 CCC
when product requirements demand technologies that
are within X-FAB’s portfolio.
Annual Report 2021 | Our business
18
As an example, X-FAB’s RF technology based on RF
SOI has been designed into both handsets and
infrastructure for 4G and 5G networks as well as Wi-Fi
connectivity. X-FAB’s current technology offering and
technologies in development will support the adaption
of the fifth generation of cellular mobile
communications (5G) requirements to manage today’s
and tomorrow’s data volumes.
After the global Covid-19-driven recession in 2020 the
demand for semiconductors recovered rapidly in 2021.
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 41%. While a similar surge
was reported for the industrial semiconductor market,
X-FAB’s industrial business was fueled by a high
demand for SiC applications, recording a revenue
increase of 50% compared to 2020. At the same time,
revenues achieved with medical semiconductors grew
strongly by 43% and are expected to continue to grow
above average.
Fig. 4.7: Tomorrow’s data volumes are going to grow at an exponential rate
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. The ever-increasing demand for
electronic content in all vehicles will lead to future
growth for X-FAB.
The electrification of cars requires intelligent
solutions for battery management and charging.
Transistors manufactured at X-FAB’s SiC foundry
enable systems with higher energy efficiency, thus
increasing the reach of one battery charge. X-FAB’s
high-voltage and high-temperature process can cope
with the challenging environmental conditions of
under-the-hood applications.
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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. Connected cars will be enabled by
the advent of 5G cellular mobile networks.
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.
For electric vehicles, the biggest challenge is battery
life, which is synonymous with driving range. X-FAB
already provides advanced technologies to address
this challenge, such as its high-voltage and SiC
offerings.
Fig. 4.8: 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.
Fig. 4.9: Main areas of industrial applications
Annual Report 2021 | Our business
20
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. 4.10: 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.
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. The transformation from a
smartphone-based wireless world to an IoT world,
where an enormous number of devices are connected,
creates further growth opportunities for X-FAB. 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.
Applications based on RFID or low-power RF standards
can benefit from the lower power consumption of
X-FAB’s RF SOI technologies compared to solutions
manufactured based on a bulk CMOS process.
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.
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 the virus 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.
21
22
23
5. X-FAB CONSOLIDATED
FINANCIAL STATEMENTS
5.1 Summary of important developments
Revenue and results
The Group’s total sales revenue in 2021 amounted to
USD 657,751 thousand (2020: USD 477,586
thousand), an increase of 38% compared to the
previous year. The Group recorded a net profit in 2021
of USD 83,640 thousand compared to a net profit of
USD 13,530 thousand in the previous year.
The net profit in the previous year included a non-
recurring gain of USD 33,551 thousand which was
included in finance income. That gain resulted from the
derecognition of a liability for redeemable preference
shares in X-FAB Sarawak, a Group subsidiary, which is
described in detail in notes 6.11 and 7.10 to the
consolidated financial statements.
The Group has received government support under
short-term working and other government support
schemes introduced in various countries to alleviate
the economic effects of the Covid-19 pandemic in
both the current and previous financial year. These
included an amount of USD 6,563 thousand
recognized as a deduction from cost of sales
representing a loan forgiven under the “Paycheck
Protection Program” which had been granted and
subsequently forgiven under the US federal
government’s Coronavirus Aid, Relief, and Economic
Security Act to secure payroll and utility payments
during the pandemic. Further details are provided in
notes 6.2 and 7.10. Other amounts of government
support received to alleviate the effects of the
pandemic did not have a significant effect on the
results of the Group as a whole. These subsidies are
designed to partially offset ongoing operating costs
and are recognized as a deduction from cost of sales,
research and development expenses, and general and
administration expenses corresponding to the nature
of the costs they are designed to offset, and have
been recognized in the same periods as the costs that
they offset provided that it is reasonably assured that
the Group has been, and will continue to be, in
compliance with the terms and conditions to obtain
and retain those subsidies. The ongoing commitments
under the terms of those subsidies are not significant
to the Group’s operations.
There have been no significant effects on the Group’s
balance sheet as a result of the Covid-19
pandemic.There has been no significant effect on the
carrying value or fair values of financial instruments
arising from the Covid-19 pandemic.
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 2021, cost of
sales increased by USD 73,921 thousand, representing
an increase of 17% compared to the previous year
which was due to higher sales in 2021, offset by the
Group’s cost-saving initiatives with a variety of cost
reduction measures primarily aimed at reducing staff,
travel, electricity, and raw material costs as well as the
loan forgiveness described above.
Research and development expenses
Research and development expenses amounted to
USD 34,308 thousand in 2021, representing 5% of
revenue (2020: 6%). Compared to the previous year
the research and development expenses increased by
28%. 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 8% in 2021.
Financial result
The net financial result decreased by USD 36,498
thousand from net income of USD 32,172 thousand in
2020 to a net expense of USD 4,326 thousand in 2021.
This decrease is primarily attributable to the fact that
finance income in 2020 included the non-recurring
gain of USD 33,551 thousand described above and to
changes in the amounts of currency exchange gains
and losses.
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
Annual Report 2021 | X-FAB consolidated financial statements
24
•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, 2021
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, 2021, 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 man-
date will expire on the date of the general meeting
deliberating on the annual accounts for the year
ending December 31, 2022. We have performed the
statutory audit of the consolidated financial state-
ments of the Group for 14 consecutive financial years.
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, 2021, prepared in accordance with International
Financial Reporting Standards 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, 2021, 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 986.931 thousand and the
consolidated statement of profit or loss and other
comprehensive income shows a profit for the year of
USD 83.640 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, 2021 and of its
consolidated financial performance and its
consolidated cash flows for the year then ended in
accordance with International Financial Reporting
Standards 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, 2021.
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
215,9 million) and deductible temporary differences
(USD 280,6 million) and has recognized deferred tax
assets of USD 45,6 million as at December 31, 2021.
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 amongst others:
•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;
25
•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, 2021 based
on the extent to which they can be recovered by
future taxable profits; and
•Assessing the adequacy of the relevant disclosures.
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
International Financial Reporting Standards 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;
Annual Report 2021 | X-FAB consolidated financial statements
26
•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.
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.
27
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, 2021, 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 24, 2022
KPMG Bedrijfsrevisoren - Réviseurs d’Entreprises
Statutory Auditor represented by
Jos Briers
Bedrijfsrevisor / Réviseur d’Entreprises
Annual Report 2021 | X-FAB consolidated financial statements
28
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
2021
2020
Revenue
6.1/12
657,751
477,586
Cost of sales
6.2/6.6/12
(507,773)
(433,852)
Gross profit
149,978
43,734
Research and development expenses
6.3/6.6/12
(34,308)
(26,812)
Selling expenses
6.4/6.6/12
(8,017)
(8,005)
General and administrative expenses
6.5/6.6
(32,771)
(29,610)
Rental income and expenses from investment properties
6.7/6.8/12
1,898
1,691
Impairment loss on trade receivables
7.4
(299)
(998)
Other income and other expenses
6.9/6.10/12
711
5,383
Operating profit/(loss)
77,192
(14,617)
Finance income
6.11/12
16,115
54,187
Finance costs
6.12/12
(20,441)
(22,015)
Net finance income/(costs)
(4,326)
32,172
Profit/(loss) before tax
72,866
17,555
Income tax
6.13
10,774
(4,025)
Profit/(loss) for the period
83,640
13,530
Attributable to:
Equity holders of the Company
83,607
13,552
Non-controlling interest
7.9
33
(22)
29
Consolidated statement of profit and loss and other comprehensive income (continued)
For the year ended December 31
in thousands of U.S. dollars
Note
2021
2020
Profit/(loss) for the period
83,640
13,530
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit obligation (asset)
7.10
842
(319)
Items that are or may be transferred to profit or loss as
follows:
Foreign currency translation differences for foreign operations
188
(302)
Other comprehensive income/(loss) for the period, net of
income tax
1,030
(621)
Total comprehensive income for the period
84,670
12,909
Total comprehensive income attributable to:
Owners of the Company
84,637
12,931
Non-controlling interest
7.9
33
(22)
Total comprehensive income for the period
84,670
12,909
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
0.64
0.10
The accompanying notes are an integral part of these consolidated financial statements.
Annual Report 2021 | X-FAB consolidated financial statements
30
Consolidated statement of financial position
in thousands of U.S. dollars
Note
December 31,
2021
December 31,
2020
ASSETS
Non-current assets
Property, plant, and equipment
7.1
340,670
336,848
Investment properties
7.1
8,310
8,556
Intangible assets
7.2
4,034
4,726
Other assets
7.5
28
68
Deferred tax assets
6.13
45,645
30,392
Total non-current assets
398,687
380,590
Current assets
Inventories
7.3
181,014
153,711
Trade and other receivables
7.4/12
73,689
54,576
Income tax receivables
6.13
745
1,077
Other assets
7.5
42,609
36,977
Cash and cash equivalents
7.6
290,187
205,867
Total current assets
588,244
452,208
Total assets
986,931
832,798
EQUITY AND LIABILITIES
Equity
Share capital
7.7
432,745
432,745
Share premium
7.7
348,709
348,709
Retained earnings
7.7
(36,154)
(120,603)
Cumulative translation adjustment
7.7
(559)
(747)
Treasury shares
7.7
(770)
(770)
Total equity attributable to equity holders of the Company
743,971
659,334
Non-controlling interests
7.9
365
344
Total equity
744,336
659,678
Non-current liabilities
Loans and borrowings
7.10
39,916
44,413
Other liabilities and provisions
7.11
5,686
4,371
Total non-current liabilities
45,602
48,784
Current liabilities
Trade payables
7.12/12
41,364
27,882
Loans and borrowings
7.10
87,114
31,796
Income tax payable
6.13
3,184
2,270
Provisions
7.13
4,445
9,604
Other liabilities
7.12
60,886
52,784
Total current liabilities
196,993
124,336
Total equity and liabilities
986,931
832,798
The accompanying notes are an integral part of these consolidated financial statements.
31
Consolidated statement of changes in Group equity
in thousands of U.S. dollars
Note
Shares issued
and fully paid
Share capital
Share premium
At December 31, 2019
130,781,669
432,745
348,709
Profit/(loss) for the period
Remeasurement of defined benefit plans
Currency translation effect, net of tax
Total comprehensive income
—
—
—
Transactions with owners of the Company
Distribution to non-controlling interests (GVG)
7.9
Total transactions with owners of the Company
—
—
—
At December 31, 2020
130,781,669
432,745
348,709
Profit/(loss) for the period
Remeasurement of defined benefit plans
Currency translation effect
Total comprehensive income
—
—
—
Transactions with owners of the Company
Distribution to non-controlling interests (GVG)
7.9
Total transactions with owners of the Company
—
—
—
At December 31, 2021
130,781,669
432,745
348,709
Annual Report 2021 | X-FAB consolidated financial statements
32
Retained
earnings
Cumulative
translation
adjustment
Treasury
shares
Total attributable
to owners of the
Company
Non-controlling
interests
Total equity
(133,836)
(445)
(770)
646,403
377
646,780
13,552
13,552
(22)
13,530
(319)
(319)
(319)
(302)
(302)
—
(302)
13,233
(302)
—
12,931
(22)
12,909
(12)
(12)
—
—
—
—
(12)
(12)
(120,603)
(747)
(770)
659,334
343
659,678
83,607
83,607
33
83,640
842
842
842
188
188
—
188
84,449
188
—
84,637
33
84,670
(11)
(11)
—
—
—
—
(11)
(11)
(36,154)
(559)
(770)
743,971
365
744,336
The accompanying notes are an integral part of these consolidated financial statements.
33
Consolidated statement of cash flows
For the year ended December 31
Cash flow from operating activities:
Profit for the period
7.1
83,640
13,530
Income tax
7.1
(10,774)
4,025
Income before taxes
7.2
72,866
17,555
Reconciliation of net income to cash flow arising from
operating activities:
70,319
34,405
Depreciation and amortization, before effect of grants and
subsidies
6.6/7.1/7.2
76,093
75,067
Amortization of investment grants and subsidies
6.60
(3,530)
(3,453)
Interest income and expenses (net)
6.11/6.12
(176)
379
Loss/(gain) on the sale of plant, property and equipment (net)
6.9/6.10/
7.1/7.2
(275)
(3,253)
Loss/(gain) on the change in fair value of financial assets (net) and
derivatives
6.11/10
—
(420)
Other non-cash transactions (net)
8
(1,793)
(33,915)
Changes in working capital
(31,573)
23,031
Decrease/(increase) of trade and other receivables
7.4
(9,769)
362
Decrease/(increase) of other assets
7.5
(4,034)
25,510
Decrease/(increase) of inventories
7.3
(27,302)
936
(Decrease)/increase of trade payables
7.12/8
5,146
(10,970)
(Decrease)/increase of other liabilities and provisions
7.11/7.12/7.13
4,386
7,193
Income taxes (paid)/received
(2,101)
(645)
Net cash from operating activities
109,511
74,346
Cash flow from investing activities:
Payments for property, plant, equipment, and intangible assets
7.1/7.2
(66,972)
(38,450)
Payments for investments in investment properties
7.1
—
(9)
Proceeds from sale of investments
10
—
1,156
Payments for loan investments to related parties
12
(827)
(211)
Proceeds from loan investments related parties
12
211
193
Proceeds from the sale of property, plant, and equipment
7.1
669
3,528
Interest received
6.11/6.12
1,769
1,864
Net cash used in investing activities
(65,150)
(31,929)
Proceeds from loans and borrowings
7.10
82,585
17,208
Repayment of loans and borrowings
7.10
(28,218)
(26,950)
Receipts from sale and leaseback arrangements
7.10/8
—
—
Payment of lease liabilities
7.10
(5,094)
(5,331)
Receipt of government grants and subsidies
535
696
Interest paid
6.10/6.11
(1,569)
(2,244)
Dividends to non-controlling interests
7.90
(12)
(12)
Net cash from/used in financing activities
48,227
(16,633)
Effects of changes in foreign currency exchange rates
on cash balances
(8,269)
6,872
Net increase/(decrease) of cash and cash equivalents
92,589
25,784
Cash and cash equivalents at the beginning of the period
205,867
173,211
Cash and cash equivalents at the end of the period
290,187
205,867
in thousands of U.S. dollars
Note
2021
2020
The accompanying notes are an integral part of these consolidated financial statements.
Annual Report 2021 | 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, 2021 is illustrated below.
* Treasury shares of X-FAB GmbH
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, 2021, were
authorized for issue in accordance with a resolution of
the directors on March 24, 2022.
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 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:
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
Annual Report 2021 | X-FAB consolidated financial statements
36
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, 2022, may differ from the amounts
recorded as impairments in the year ended December
31, 2021, 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
•7.6  Cash and cash equivalents
•7.10 Current and non-current 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
there is reasonable assurance that the entity will
comply with the relevant conditions set out in the
Annual Report 2021 | X-FAB consolidated financial statements
38
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.
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.
39
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
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.
Annual Report 2021 | X-FAB consolidated financial statements
40
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.
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
41
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.
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
Annual Report 2021 | X-FAB consolidated financial statements
42
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.
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
43
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
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)
Annual Report 2021 | X-FAB consolidated financial statements
44
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
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
45
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, 2021, have been applied by the Group for
the first time in preparing these consolidated financial
statements.
Standard/interpretation
Effective date
Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16 Interest Rate
Benchmark Reform – Phase 2
January 1, 2021
Amendments to IFRS 16 Leases:
Covid-19-Related Rent Concessions
beyond June 30, 2021
April 1, 2021
None of the above amendments to standards or new
and amended interpretations had 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, 2021
A number of new standards and amendments to
standards and interpretations are not yet effective for
the year ended December 31, 2021, 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: Classification of Liabilities as Current
or Non-current
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 to
IAS 1 by one year to annual reporting periods beginning
on or after January 1, 2023, with early application
permitted. The amendments have not yet been
endorsed by the EU.
The IASB has published a new exposure draft on the
topic on November 19, 2021.
Amendments to IFRS 3 Business Combinations
Amendments to IFRS 3 Business Combinations; IAS 16
Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets; as well as
Annual improvements, issued on May 14, 2020, include
several narrow-scope amendments which are changes
that clarify the wording or correct minor
consequences, oversights or conflicts between
requirements in the standards:
•Amendments to IFRS 3 Business Combinations
update a reference in IFRS 3 to the Conceptual
Framework for Financial Reporting without
changing the accounting requirements for business
combinations.
•Amendments to IAS 16 Property, Plant and
Equipment prohibit a company from deducting
from the cost of property, plant, and equipment
amounts received from selling items produced
while the company is preparing the asset for its
intended use. Instead, a company will recognize
such sales proceeds and related cost in profit or
loss. The amendments also clarify that testing
whether an item of PPE is functioning properly
means assessing its technical and physical
performance rather than assessing its financial
performance.
•Amendments to IAS 37 Provisions, Contingent
Liabilities and Contingent Assets specify which
costs a company includes when assessing whether
a contract will be loss-making. The amendments
clarify that the “costs of fulfilling a contract”
comprise both the incremental costs and an
allocation of other direct costs.
•Annual Improvements to IFRS Standards 2018–
2020 make minor amendments to IFRS 1 First-time
Adoption of International Financial Reporting
Standards, IFRS 9 Financial Instruments, IAS 41
Agriculture, and the illustrative examples
accompanying IFRS 16 Leases.
The amendments are effective for annual periods
beginning on or after January 1, 2022. These
amendments have been endorsed by the EU.
Annual Report 2021 | X-FAB consolidated financial statements
46
Amendments to IAS 1 Presentation of Financial
Statements and IFRS Practice Statement 2:
Disclosure of Accounting Policies
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 not
yet been endorsed by the EU.
Amendments to IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors: Definition of
Accounting Estimate
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 not
yet been endorsed by the EU.
Amendments to IAS 12 Income Taxes: Deferred Tax
Related to Assets and Liabilities Arising from a
Single Transaction
Amendments to IAS 12 Income Taxes: Deferred Tax
Related to Assets and Liabilities Arising from a Single
Transaction, issued on May 6, 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 not
yet been endorsed by the EU.
5 Business combinations
There have been no business combinations in the years
ended December 31, 2021, or December 31, 2020,
involving the Group.
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
2021
2020
Gross revenue PCM wafer
572,986
415,160
Gross revenue NRE and
technology services
89,290
67,967
Other revenue
19
16
Discounts and warranty
credits
(4,544)
(5,557)
Total
657,751
477,586
Revenues from production increased by 38%, driven
by a consistently strong demand across all end
markets, while revenue from from prototyping
increased by 31%.
No revenue is recognized in the current year from
performance obligations satisfied in prior years (e.g.
changes in transaction price).
6.2 Cost of sales
The cost of sales comprises the following:
in thousands of U.S. dollars
2021
2020
Employee-related expenses
(181,086)
(164,075)
Cost of materials
(156,937)
(108,451)
Costs of fixed assets
(maintenance, spare parts,
etc.)
(77,783)
(61,123)
Depreciation and
amortization
(66,194)
(65,103)
Facility costs
(60,332)
(56,929)
External services
(7,736)
(3,793)
Changes in inventories
22,303
8,614
Grants
20,240
12,352
Other
(248)
4,656
Total
(507,773)
(433,852)
While revenues increased by 38%, the increase in cost
of sales was lower at 17% in 2021 due to the Group’s
47
cost-saving initiatives with a variety of cost reduction
measures primarily aimed at reducing staff, travel,
electricity and raw material costs and due to the
recognition of USD 6,563 thousand of Coronavirus-
related debt forgiven (see below).
The cost-saving program, initiated in 2019 in response
to the automotive crisis, was continued and intensified
after the Covid-19 pandemic set in, yielding significant
savings throughout the year and laying the foundation
for greater profitability with continued growth going
forward.
Grants which 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 US
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
2021
2020
Employee-related expenses
(25,245)
(23,103)
Cost of materials
(10,279)
(9,728)
Costs of fixed assets
(maintenance, spare parts,
etc.)
(3,693)
(3,738)
Depreciation and
amortization
(1,371)
(1,413)
Facility costs
(949)
(895)
External services
(799)
(462)
Grants
10,681
13,432
Other
(2,655)
(905)
Total
(34,308)
(26,812)
Research and development expenses increased
consistently with the increased sales volume in 2021. 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
2021
2020
Employee-related expenses
(7,046)
(6,594)
Advertising costs and costs
of selling goods
(844)
(1,096)
External services
(154)
(364)
Facility costs
(147)
(126)
Depreciation and
amortization
(102)
(102)
Costs of fixed assets
(maintenance, spare parts,
etc.)
(79)
(27)
Other
355
304
Total
(8,017)
(8,005)
6.5 General and administrative expenses
The general and administrative expenses comprise the
following:
in thousands of U.S. dollars
2021
2020
Employee-related expenses
(21,206)
(20,483)
External services
(3,864)
(4,225)
Depreciation and
amortization
(3,273)
(3,420)
Costs of fixed assets
(maintenance, spare parts,
etc.)
(3,232)
(2,063)
Insurance, dues, and fees
(1,522)
(1,550)
Facility costs
(1,128)
(1,064)
Grants
635
2,313
Other
819
882
Total
(32,771)
(29,610)
Grants received in 2020 primarily related to
employment grants received by X-FAB France.
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
2021
2020
Included in cost of sales
(65,232)
(64,442)
Included in research and
development expenses
(1,196)
(1,201)
Included in selling expenses
(102)
(102)
Included in general and
administrative expenses
(1,625)
(1,586)
Included in expenses related
to investment properties and
other expenses
(1,623)
(1,598)
Total
(69,778)
(68,929)
Expenses include charges for amortization of
intangible assets allocated to the following items:
in thousands of U.S. dollars
2021
2020
Included in cost of sales
(962)
(661)
Included in research and
development expenses
(175)
(212)
Included in general and
administrative expenses
(1,648)
(1,817)
Total
(2,785)
(2,690)
Annual Report 2021 | X-FAB consolidated financial statements
48
Employee-related expenses allocated according to
function in the income statement consist of the
following:
in thousands of U.S. dollars
2021
2020
Wages and salaries
(184,334)
(167,907)
Social security costs
(35,580)
(33,173)
Contributions to defined
contribution plans
(10,077)
(9,696)
Other employee-related
costs
(4,592)
(3,535)
Total
(234,583)
(214,311)
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
2021
2020
Income from technical
services provided
7,075
6,280
Income from investment
property rentals
6,876
6,543
Total
13,951
12,823
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
2021
2020
Expenses for technical
services provided
(8,956)
(7,745)
Expenses for connection
with investment property
rentals
(3,097)
(3,388)
Total
(12,053)
(11,133)
Expenses in connection with investment properties
mainly relate to depreciation and building maintenance.
6.9 Other income
Other income comprises the following:
in thousands of U.S. dollars
2021
2020
Income from recharges
2,817
3,789
Income from other admin
services/cost sharing
693
366
Gains on disposals of
property, plant, and
equipment
600
3,507
Income from sales of
materials
199
1,512
Other
607
506
Total
4,916
9,680
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
2020 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
2021
2020
Expenses from recharges
(2,817)
(3,789)
Losses on disposal of
property, plant, and
equipment
(325)
(254)
Other
(1,113)
(254)
Total
(4,255)
(4,297)
The expenses from recharges primarily relates to costs
in connection with recharges for software maintenance
provided to related parties. Refer to note 12.
49
6.11 Finance income
Finance income comprises the following:
in thousands of U.S. dollars
2021
2020
Interest on financial assets
measured at amortized cost:
Interest on cash and cash
equivalents
1,767
1,864
Change in fair value of
financial assets and liabilities
at fair value through profit or
loss:
Gains on other financial
assets classified as held for
trading
—
420
Other:
Income from exchange rate
differences
14,347
18,351
Gain on derecognition of
financial liability
—
33,551
Total
16,114
54,186
The gain on derecognition of a financial liability in 2020
amounting to USD 33,551 thousand was the result of
the extinguishment of redeemable preference shares
(RPS) previously held in X-FAB Sarawak by Sarawak
Technology Holdings Sdn. Bhd. (STH), a Malaysian
government agency.
Prior to derecognition, the financial liability
represented the discounted value of the total amount
payable in 2030, discounted on initial recognition. The
extinguishment of the financial liability came into
effect following an agreement entered into on
October 1, 2020 between X-FAB Sarawak and STH.
Under this agreement, X-FAB Sarawak was released
from all future dividend and redemption payment
obligations for the redeemable preference shares and
the RPS held by STH were canceled for the benefit of
X-FAB Sarawak. In consideration for the
extinguishment STH was released from the obligation
to disburse the balance of an incentive grant previously
payable to X-FAB Sarawak in annual installments for
2020 and thereafter amounting to a total of
USD 38,400,000 under the terms of the Agreement
for Research and Development (R&D) Incentive Grant
dated December 30, 2013 (Grant Agreement). The
Grant Agreement was also terminated under this
arrangement.
The decrease in income from exchange rate
differences is primarily due to the lower level of
currency exchange rate gains on cash balances
denominated in Malaysian ringgit and euros.
6.12 Finance costs
Finance costs comprise the following:
in thousands of U.S. dollars
2021
2020
Interest on financial liabilities
measured at amortized cost:
Loans and borrowings
(1,592)
(3,991)
Other:
Expenses from exchange
rate differences
(18,850)
(18,024)
Total
(20,442)
(22,015)
Interest expenses in 2020 also included interest
expenses incurred on the RPS prior to its
derecognition in 2020 consisting of USD 996
thousand for the unwinding of the discounted RPS
liability and an expense of USD 750 thousand for the
2% cumulative preference dividend payable to STH as
holder of the RPS, neither of which resulted in cash
outflows in 2020.
Exchange rate expenses contain the translation effects
of euro-denominated loans and of euro-denominated
cash.
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 in the years 2021 and 2020 comprised
the following:
in thousands of U.S. dollars
2021
2020
Current taxes:
Actual income tax charge for
the period
(2,060)
(554)
Adjustment of prior years’
tax charges
(2,420)
59
(4,480)
(495)
Deferred taxes
15,253
(3,530)
Total
10,773
(4,025)
The Belgian applicable tax rate applicable for the
Group’s result was 25.00% in 2021 and 2020 . 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
Annual Report 2021 | X-FAB consolidated financial statements
50
24.00%, and the tax rate applicable to X-FAB France is
26.50% (2020: 28.00%).
The reconciliation of the theoretical tax charge based
on the IFRS net income before tax is as follows for the
years 2021 and 2020:
in thousands of U.S.
dollars
2021
2020
Result before taxes
72,866
17,555
Theoretical tax at combined
applicable Belgian tax rate
(25.00% in 2021 and 2020)
(18,217)
(4,389)
Recognition of previously
unrecognized deferred tax
on timing differences and
tax losses
42,395
9,691
Current year losses for
which no deferred tax asset
is recognized
(12,457)
(24,559)
Adjustment of prior period
tax liabilities recorded in the
current period
(2,420)
(280)
Effect of tax-free income
1,580
11,524
Currency effects
(892)
1,039
Effect of permanent
differences
(89)
—
Effect of non-deductible
expenditures
(147)
(123)
Effect of changes in
applicable tax rates enacted
during the year
—
—
Effect of different tax rates
applying to foreign
operations
600
3,043
Differences which are only
valid for special taxes
420
29
Income/(expense) for
income taxes recognized
in the consolidated
statement of profit or loss
10,773
(4,025)
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 39,209 thousand
recognized in the Group’s Malaysian subsidiary at
December 31, 2021 (December 31, 2020: USD 30,618
thousand). The income statement includes recognition
of previously unrecognized deferred tax on timing
differences and tax losses carried forward of
USD 42,395 thousand (previous year: USD 9,691
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 2021 and 2020.
The deferred tax assets and liabilities arise from
temporary differences and unused tax losses as
follows:
in thousands of U.S. dollars
2021
2020
Deferred tax assets –
unrecognized amounts
On unused tax losses
215,947
221,875
On temporary differences
Property, plant, and
equipment/capital
allowances
278,996
321,282
Other temporary differences
1,613
5,504
Total unrecognized
deferred tax assets
496,556
548,661
Deferred tax assets –
recognized amounts
On unused tax losses
18,833
12,380
On temporary differences
Property, plant, and
equipment/capital
allowances
31,341
26,144
Other temporary differences
(4,529)
(8,131)
Total recognized deferred
tax assets
45,645
30,393
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 2025 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
2021
2020
Belgian tax loss carry forward
—
213
German corporation tax loss
carry forward
172,876
192,546
German trade tax loss carry
forward
203,005
214,567
US federal tax loss carry
forward
144,416
141,382
US state tax loss carry
forward
14,825
11,791
Malaysian tax loss carry
forward
361,114
373,350
French tax loss carry forward
219,559
199,847
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. US federal tax
losses for years prior to 2018 expire, if unused, after a
period of 20 years, with the Group’s first tax losses
expiring in 2020. US federal tax losses of USD 3,591
thousand expired in 2021 (2020: USD 0 thousand). The
Group estimates that further US federal tax losses of
USD 29,855 thousand will expire in the year 2022
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 2021 | 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, 2020
15,324
26,978
(8,380)
33,922
Recognized in profit and loss
(2,944)
(834)
249
(3,529)
Recognized in other comprehensive income
—
—
—
—
Balance at December 31, 2020
12,380
26,144
(8,131)
30,393
Set off of tax
—
803
(803)
—
Net balance at December 31, 2020
12,380
26,947
(8,934)
30,393
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
Changes in recognized deferred tax assets resulted in
a deferred tax income of USD 15,252 thousand (2020:
expense of USD 3,529 thousand). The increase in
previously unrecognized deferred tax assets on
property, plant, and equipment and other timing
differences recognized in 2021 compared to 2020 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.
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, 2021 and
December 31, 2020.
No instruments with a potential diluting effect on
shareholders’ equity have been in issue during the
years ended December 31, 2021 and December 31,
2020. 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, 2021
14,139
40,554
232,686
4,855
44,614
336,848
Accumulated
historical cost
January 1, 2021
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, 2021
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
Net book value
January 1, 2020
14,165
41,200
267,874
5,661
39,855
368,755
Accumulated
historical cost
January 1, 2020
14,287
107,587
1,049,067
26,648
40,545
1,238,134
Additions
—
86
8,380
1,289
27,182
36,937
Disposals
—
—
(8,209)
(346)
(874)
(9,429)
Reclassifications
4
2,793
18,778
624
(22,239)
(40)
Effect of changes in
exchange rates
—
—
—
(206)
—
(206)
Accumulated
historical cost
December 31, 2020
14,291
110,466
1,068,016
28,009
44,614
1,265,396
Accumulated
depreciation
January 1, 2020
(122)
(66,387)
(781,193)
(20,987)
(690)
(869,379)
Additions
(30)
(3,525)
(62,175)
(2,611)
—
(68,341)
Disposals
—
—
8,038
334
690
9,062
Effect of changes in
exchange rates
—
—
—
110
—
110
Accumulated
depreciation
December 31, 2020
(152)
(69,912)
(835,330)
(23,154)
—
(928,548)
Net book value 
December 31, 2020
14,139
40,554
232,686
4,855
44,614
336,848
Annual Report 2021 | 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 35 million), X-FAB Sarawak (USD 21
million), X-FAB Texas (USD 6 million), X-FAB Erfurt
(USD 5 million), X-FAB Dresden (USD 3 million) ,       
X-FAB MEMS Foundry Itzehoe (USD 2 million), and   
X-FAB MEMS Foundry (USD 1 million). Assets under
construction primarily include investments in technical
machinery. Additions in property, plant, and equipment
resulted in cash payments in 2021 of USD 66,972
thousand (2020: USD 38,450 thousand). Refer to the
statement of cash flows.
The Group received investment grants related to the
acquisition of qualifying assets totaling USD 535
thousand (2020: USD 696 thousand).
No impairment tests were performed in the financial
year ended December 31, 2021 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 136,121 thousand
(December 31, 2020: USD 134,340 thousand) and
accumulated depreciation has been reduced by
USD 122,880 thousand (December 31, 2020:
USD 119,354 thousand).
At December 31, 2021 property, plant, and equipment
with a book value of USD 31 million (December 31,
2020: USD 58 million) had been provided as collateral
security to third-party lenders. The carrying values of
technical machinery and equipment includes USD 22.0
million (December 31, 2020: USD 25.3 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 2023,
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
2021
2020
Net book value, beginning
of period
8,556
9,127
Additions
—
10
Depreciation
(632)
(581)
Disposals
—
—
Reclassifications
385
—
Net book value, end of
period
8,309
8,556
Accumulated cost
33,647
33,262
Accumulated depreciation
(25,339)
(24,707)
Fair value
26,258
24,964
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, 2021: USD 9,374
thousand; December 31, 2020: 8,085 thousand), the
USA (December 31, 2021: USD 2,039 thousand;
December 31, 2020: 2,034 thousand), and France
(December 31, 2021: USD 14,845 thousand; December
31, 2020: 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 US 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 1.5% (December 31,
2020: 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 2021 or 2020.
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
2021
2020
2021
6,551
2022
5,034
6,213
2023
5,125
1,344
2024
1,063
1,133
2025
1,063
1,133
2026
1,063
Total
13,348
16,374
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, 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
Net book value January 1, 2020
6,035
2,328
8,363
Accumulated historical cost January 1, 2020
69,361
2,328
71,689
Additions
832
607
1,439
Disposals
(1,723)
(774)
(2,497)
Reclassifications
1,063
(1,020)
43
Accumulated historical cost December 31, 2020
69,533
1,141
70,674
Accumulated amortization January 1, 2020
(63,326)
—
(63,326)
Additions
(2,690)
—
(2,690)
Disposals
68
—
68
Accumulated amortization December 31, 2020
(65,948)
—
(65,948)
Net book value December 31, 2020
3,585
1,141
4,726
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 2021 or 2020.
7.3 Inventories
Inventories comprise the following:
in thousands of U.S. dollars
2021
2020
Materials and supplies
106,020
100,649
Work in progress
78,495
50,209
Finished goods
2,050
9,000
Merchandise
6
6
Write-downs
(5,558)
(6,152)
Total
181,013
153,712
Annual Report 2021 | X-FAB consolidated financial statements
56
Changes in work in progress and finished goods
totaling USD 22,844 thousand were included in cost of
sales in 2021 (2020: USD 9,803 thousand). Write-
downs are recorded against inventories and
recognized as an expense in cost of sales in the period
of USD 541 thousand (2020: USD 1,190 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
2021
2020
Trade accounts receivable
49,500
31,945
Amounts due from related
party entities
25,217
24,144
Allowances
(1,028)
(1,513)
Total
73,689
54,576
The increase in trade receivables in 2021 compared to
2020 corresponds with the change in revenues.
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
2021
2020
Neither past due nor
impaired
30,305
20,841
Past due 1–30 days
17,004
7,826
Past due 31–60 days
615
1,433
Past due 61–360 days
548
332
Past due > 360 days
—
—
Total
48,472
30,432
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, 2021 and December 31, 2020:
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)
57
December 31, 2020
in thousands of
U.S. dollars
Weighted
average
loss rate
Gross
carrying
amount
Loss
allowance
Neither past due
nor impaired
0.08%
37,847
(30)
Past due 1–30
days
0.08%
13,150
(11)
Past due 31–60
days
1.50%
2,460
(37)
Past due 61–90
days
3.75%
1,052
(39)
More than 90
days past due
(less credit
impaired)
9.75 %
67
(7)
Total
54,576
(124)
in thousands of U.S. dollars
2021
2020
Balance at January 1
(1,513)
(1,165)
Impairment loss recognized
(275)
(890)
Use of allowance
784
568
Reversal of allowance
—
10
Net remeasurement of loss
allowance
(24)
(36)
Balance at December 31
(1,028)
(1,513)
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
2021
2020
Other assets
42,609
36,977
Other non-current assets
28
68
Total
42,637
37,045
Current other assets comprise the following:
in thousands of U.S. dollars
2021
2020
R&D grants receivable
18,596
17,885
Prepaid expenses
18,112
11,431
Receivables from energy
surcharges
3,116
4,308
Taxes (other)
1,512
1,216
Deposits
341
1,966
Investment grants and
subsidies receivable
480
—
Other
452
171
Total
42,609
36,977
Research and development grants receivable in 2021
include USD 15,895 thousand research and
development tax credits and competitiveness and
employment tax credits attributable to X-FAB France
(December 31, 2020: USD 14,929 thousand).
Research and development tax credits and
competitiveness and employment tax credits
attributable to X-FAB France totaling EUR 9,217
thousand (2020: USD 28,727 thousand) were sold
without recourse to a bank in 2021. The carrying
amounts of the credits sold generated cash inflows of
EUR 8,928 thousand (2020: USD 28,119 thousand) net
of EUR 233 thousand representing interest expenses
and fees (2020: USD 608 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
2021
2020
Cash and bank balances
287,907
202,838
Term deposits
2,280
3,029
Total
290,187
205,867
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, 2021, and
December 31, 2020. Each share carries one vote at the
Company’s general meetings. There are no unissued
shares authorized for issue.
Annual Report 2021 | 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 historical balance of
cumulative losses of the Group together with the
cumulated balance of the remeasurement of defined
benefit plans attributable to owners of the parent. The
negative retained earnings primarily result from the
Group’s acquisition of X-FAB Sarawak Sdn. Bhd. under
a “reverse acquisition transaction” in 2006.
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, 2021 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, 2020:
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, 2021, or December 31,
2020.
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 80% 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 March 16, 2017, 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 was valid for five years from March 16,
2017 and expired on March 17, 2022.
The above authorization was 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). 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 2021 or
2020.
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
The non-controlling interests for the period and the
accumulated non-controlling interests represent the
5.1% (December 31, 2020: 5.1%) non-controlling
shareholders’ interests in the subsidiary GVG. GVG is 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 2021 amounted to USD 807 thousand (2020 net
loss: USD 274 thousand). GVG had total assets
amounting to USD 9,084 thousand at December 31,
2021 (December 31, 2020: USD 9,602 thousand),
liabilities of USD 4,887 thousand (December 31, 2020:
USD 6,200 thousand), and equity of USD 4,197
thousand (December 31, 2020: USD 3,402 thousand).
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
2021
2020
Unused credit lines
Unused part of multicurrency
revolving credit facility
denominated in EUR or in
USD – variable rates
152,494
—
Interest rate USD: SOFR +
1.25%
Interest rate EUR: EURIBOR
+1.0%
Unused credit lines
denominated in EUR - fixed
rates
4,520
1,440
Interest rate: 2.1%
Other unused credit lines
denominated in EUR –
variable rates
5,651
1,153
Interest rates: EURIBOR
+1.957%/ EURIBOR +2.63%
Annual Report 2021 | 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
2021
2020
Bank loans and overdrafts
Fixed interest bank loans denominated in USD
—
6,563
Maturity: 2021
Interest rates: 1.0%
Repayments in monthly installments
Fixed interest bank loans denominated in EUR
23,247
33,006
Maturity: 2020–2026
Interest rates: 0.85–2.3%
Repayments in monthly or quarterly installments
Variable interest bank loans denominated in EUR
—
3,779
Maturity: 2020–2021
Interest rate: EURIBOR + 1.58% – EURIBOR + 1.69%
Repayments in quarterly installments
Variable interest bank overdrafts in EUR
—
8,225
Maturity: 2021
Interest rates: EURIBOR + 3.0%
Variable interest revolving credit facility denominated in USD
30,582
—
Maturity: 2022
Interest rates: SOFR + 1.25%
Repayment on maturity
Variable interest revolving credit facility denominated in EUR
42,944
—
Maturity: 2022
Interest rates: EURIBOR + 1.0%
Repayment on maturity
Leasing arrangements
Leasing liabilities denominated in EUR
9,209
1,934
Maturity: 2020–2028
Interest rates: 0.6–1.91%
Repayment in monthly installments
Liabilities for leases recognized on application of IFRS 16
21,048
22,702
denominated in USD, EUR and MYR
Maturity: 2020–2034
Interest rates: 0.02–4.82%
Repayment in monthly installments
Total
127,030
76,209
Current loans and borrowings
87,114
31,796
Non-current loans and borrowings
39,916
44,413
Variable interest bank loans include loans amounting to
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.
61
The movements on loans and borrowing include
exchange rate gains of USD 2,627 thousand resulting
from the translation of euro-denominated loans and
borrowings (2020: exchange rate losses of USD 4,042
thousand).
The fair value of the Group’s loans and borrowings are
presented in note 10.
Approximately 42% of the Group’s borrowings are at a
fixed rate of interest (December 31, 2020: 84%). Refer
to note 10.
Bank loans and overdrafts of USD 20,281 thousand
(2020: USD 36,785 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 has been
derecognized and reported in the financial year 2021 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
US 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.
As described in note 6.11, a liability for the X-FAB
Sarawak redeemable preference shares representing a
discounted carrying amount of a USD 50,000
thousand debt investment held by Sarawak
Technologies Holding Sdn. Bhd. due for repayment in
2030 was derecognized in 2020 as a result of an
agreement between X-FAB Sarawak and Sarawak
Technology Holdings Sdn. Bhd. entered into on
October 1, 2020. The redeemable preference shares
required X-FAB Sarawak to make payments of a
cumulative preference dividend of 2% to the holder to
the extent that X-FAB Sarawak had sufficient net
profits after taxation available for distribution for the
relevant financial year including retained profits and
distributable reserves brought forward.
Prior to derecognition, the USD 50,000 thousand due
for repayment in 2030 was carried at USD 33,551
thousand, a discounted value, discounted at an interest
rate of 4.12%. The discount rate was calculated at the
date of the initial recognition of the liability, taking into
account a weighted average risk-free rate of United
States treasury bills with a corresponding maturity and
an additional spread to reflect the risk premium that
market participants would require based on an average
credit spread for BBB-rated debt instruments with a
corresponding maturity.
Contractual maturities
The contractual maturities of the Group’s non-
derivative financial liabilities (including lease liabilities)
at December 31, 2021 and 2020 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
2021
2020
2021
31,796
2022
87,880
18,340
2023
13,687
10,841
2024
8,733
5,197
2025–2034
16,730
10,035
Total
127,030
76,209
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 2021 | 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 2021:
in thousands of U.S.
dollars
Liabilities
Other
Equity
Loans and
borrowings
Lease
liability
Share
capital
Share
premium
Retained
earnings
NCI
Total
Balance at December
31, 2020
51,573
24,636
11,037
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
—
—
535
—
—
—
—
535
Total changes from
financing cash flows
52,798
(5,094)
535
—
—
—
(12)
48,227
Other changes
Effect of changes in
foreign exchange
rates
(2,627)
(86)
—
—
—
—
—
(2,713)
Changes in fair value
—
—
—
—
—
—
—
—
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
11,572
432,745
348,709
(36,155)
365
884,266
63
The following table provides a reconciliation of the movements in liabilities to the cash flows arising from financing
activities for year 2020:
in thousands of U.S.
dollars
Liabilities
Other
Equity
Loans and
borrowings
Lease
liability
Share
capital
Share
premium
Retained
earnings
NCI
Total
Balance at December
31, 2019
89,204
29,843
10,341
432,745
348,709
(133,837)
378
777,383
Changes from
financing cash flows
Proceeds from loans
and borrowings
17,208
—
—
—
—
—
—
17,208
Repayment of loans
and borrowings
(26,950)
—
—
—
—
—
—
(26,950)
Repayment of loans
and borrowings from
related parties
—
—
—
—
—
—
—
—
Payments of lease
liabilities
—
(5,331)
—
—
—
—
—
(5,331)
Interest paid
(2,184)
(60)
—
—
—
—
—
(2,244)
Payment of preference
dividend
—
—
—
—
—
—
—
—
Distribution to non-
controlling interests
—
—
—
—
—
—
—
(12)
Receipt of investment
government grants and
subsidies
—
—
696
—
—
—
—
696
Total changes from
financing cash flows
(11,926)
(5,391)
696
—
—
—
(12)
(16,633)
Other changes
Effect of changes in
foreign exchange
rates
3,915
124
—
—
—
—
—
4,039
Changes in fair value
—
—
—
—
—
—
—
—
Liability related
Interest expenses
3,931
60
—
—
—
—
—
3,991
Gain on derecognition
of financial liability
(33,551)
(33,551)
Equity related
—
—
—
—
—
13,233
(22)
13,211
Total liability-related
other changes
(29,620)
60
—
—
—
—
—
(29,560)
Total equity-related
other changes
—
—
—
—
—
13,233
(22)
13,211
Balance at December
31, 2020
51,573
24,636
11,037
432,745
348,709
(120,604)
344
748,440
Annual Report 2021 | 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 5,620 thousand at December 31, 2021 (December
31, 2020: USD 4,008 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 0
thousand (December 31, 2020: USD 291 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 9,974 thousand
(December 31, 2020: USD 8,571 thousand) less plan
assets recorded at their fair values of USD 4,354
thousand (December 31, 2020: USD 4,272 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, 2021 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 1,918
thousand at December 31, 2021 (December 31, 2020:
USD 2,043 thousand) and equity savings plans with a
value of USD 2,436 thousand at December 31, 2021
(December 31, 2020: USD 2,229 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, 2021
8,571
(4,272)
4,299
Included in profit or loss:
Current service cost
382
382
Past service cost/curtailment
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
—
January 1, 2020
11,409
(3,808)
7,601
Included in profit or loss:
Current service cost
527
527
Past service cost
(3,589)
(3,589)
Currency effects from conversion into USD
825
(374)
451
Included in OCI:
Return on plan assets
(90)
(90)
Actuarial losses
410
410
Other:
Contributions paid by the employer
—
—
—
Benefits paid
(1,011)
—
(1,011)
December 31, 2020
8,571
(4,272)
4,299
65
The primary assumptions made in calculating the
defined benefit obligation were as follows:
in thousands of U.S. dollars
2021
2020
Discount rate
0.79%
0.28%
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 0.5% lower than
inflation (December 31, 2020: 0.5% lower).
Assumptions regarding future mortality have been
based on published statistics and mortality tables.
Past service cost adjustments in 2021 and 2020 relate
to a plan curtailment at X-FAB France in 2020. The
plan curtailment in 2020 reflected the reduction in
expected benefits payable following a restructuring
plan initiated by the Group in 2020. The resulting
reduction in expense is included in employee-related
expenses in general and administration expenses. The
past service cost adjustments in 2021 reflect the
amendment of the previous years’ estimate 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 the reporting date 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 De-
cember
31, 2021
Decrease
at De-
cember
31, 2021
Increase
at De-
cember
31, 2020
Decrease
at De-
cember
31, 2020
Discount
rate (+0.25%
movement)
—
166
—
197
Future
salary
growth
(+0.25%
movement)
167
—
203
—
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 27,882 thousand at
December 31, 2020 to USD 41,364 thousand at
December 31, 2021. 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
2021
2020
Accrued liabilities
17,521
21,074
For invoices not yet
received
15,850
19,327
Royalties
376
399
Sales commissions
307
297
Staff association costs
602
538
Other
386
513
Advances received
19,193
10,264
Deferred income
293
520
Employee-related
liabilities
23,879
20,899
Wages
2,931
1,107
Earned holiday
entitlement, incentives
12,469
8,351
Payroll taxes
3,870
3,452
Social security costs
4,609
7,989
Other
—
28
Total
60,886
52,785
Liabilities for social security costs at December 31, 2021
and December 31, 2020 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.
7.13 Provisions
Provisions comprise the following:
in thousands of U.S. dollars
2021
2020
Current provisions
4,445
9,604
Non-current provisions
66
72
Total
4,511
9,676
Current provisions primarily relate to warranty costs.
Provisions in 2020 also included a provision for the
costs associated with a restructuring plan which was
implemented at the Group’s French location in 2021
due to falling demand for certain legacy products
which were manufactured at the location prior to its
acquisition by X-FAB and the smooth first industrial
development ramp up of X-FAB technologies.
Following announcement of the plan on December 10,
2020, the Group recognized a provision of USD 5,722
thousand for expected restructuring costs. The
expected restructuring costs primarily include
employee termination benefits and are based on a
detailed plan agreed between management and
employees’ representatives. The restructuring
measures were completed in 2021.
The expense to record the provision for restructuring
costs amounting to USD 5,722 thousand was included
in general and administration expenses in 2020 and the
release of the unused amounts of the provision
Annual Report 2021 | X-FAB consolidated financial statements
66
amounting to USD 3,312 thousand was offset against
general and administration expenses in 2021.
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.
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.
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,
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
in
thousands
of U.S.
dollars
Warranty
provisions
Employee
provisions
Restruct-
uring
cost
Total
January 1,
2020
5,336
1,348
—
6,684
Provided
for
1,519
78
5,722
7,319
Utilized
(2,508)
(26)
(2,534)
Released
(1,865)
—
(1,865)
Effect of
changes in
exchange
rates
59
12
71
December
31, 2020
2,541
1,412
5,722
9,675
Employee provisions include a provision for litigation of
X-FAB France.
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 (see note 7.10) and
the gain on derecognition of a financial liability
amounting to USD 33,550 thousand in 2020 (see
note 6.11 and note 7.10).
The difference between the cash outflows for
investments and the additions to property, plant, and
equipment are 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
(2020: none). The cash inflow from that transaction will
be received in 2022 and is accordingly not yet
reported in the statement of cash flows.
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
2021
2020
Europe
403,201
287,263
Belgium
256,258
186,050
Germany
70,245
52,368
United Kingdom
37,028
19,978
Austria
10,837
5,893
Switzerland
7,380
4,191
France
7,240
7,962
Sweden
3,752
2,506
Denmark
2,990
2,473
Other
2,585
2,217
Finland
1,743
1,353
Netherlands
1,689
1,012
Ireland
1,454
1,260
Asia
149,736
103,722
China
44,916
29,845
Japan
24,815
16,378
Malaysia
17,893
11,866
Singapore
16,743
15,185
Korea
15,302
9,550
Thailand
10,123
9,387
Taiwan
10,067
4,671
Hong Kong
5,667
3,616
New Zealand
3,060
1,820
Other
1,150
1,404
United States of America
102,189
84,682
Rest of the world
2,625
1,919
Total
657,751
477,586
Non-current assets by geographic area:
in thousands of U.S.
dollars
2021
2020
Malaysia
156,660
156,075
Germany
133,482
144,956
France
66,491
40,092
United States of America
42,054
39,467
Total
398,687
380,590
Significant customers
The Group has one (2020: 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 254,362 thousand in 2021 (2020:
USD 186,138).
Annual Report 2021 | 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, 2021
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
73,689
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)
December 31, 2020
Financial assets measured at amortized cost
Trade and other receivables
54,576
Cash and cash equivalents
205,867
Financial liabilities measured at amortized
cost
Trade payables
(27,882)
Bank loans, overdrafts, and lease liabilities
(76,209)
—
(75,911)
—
(75,911)
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 in the financial year. In the previous year the
Group held an equity investment in a company listed
on the NASDAQ stock exchange which was, until its
sale in 2020, measured at fair value based on the price
quoted for those shares at the respective reporting
dates. Changes in the fair value of this investment were
recorded in profit or loss, although the investment was
not held for trading purposes, as the Group did not opt
to present fair value changes in other comprehensive
income.
The Group held no forward foreign exchange
contracts or interest rate swaps in the reporting period.
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.
69
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.
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, 2021
approximately 42% of the Group’s borrowings
(excluding financial leases) are at a fixed rate of
interest (December 31, 2020: 84%). 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 table provides 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
2021
2020
Assets
Trade accounts receivable
25,603
13,778
Other assets
19,145
26,484
Cash
103,702
53,552
Liabilities
Trade payables
11,411
8,490
Loans and borrowings
75,399
45,011
Other liabilities and
provisions
33,521
33,393
Assets and liabilities denominated in MYR:
in thousands of U.S. dollars
2021
2020
Assets
Trade accounts receivable
49
230
Other assets
5,972
6,181
Cash
70,419
118,787
Liabilities
Trade payables
330
865
Other liabilities and
provisions
7,110
18,943
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:
2021
2020
USD/EUR
Closing rate
0.885
0.815
Average rate
0.845
0.876
USD/MYR
Closing rate
4.182
4.037
Average rate
4.144
4.202
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 37% (2020: 32%) of the Group’s sales
and 47% (2020: 51%) of the costs are denominated in
currencies other than the functional currency of the
operating unit making the sales.
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
Annual Report 2021 | X-FAB consolidated financial statements
70
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
2021
5%
1,404
-5%
(1,404)
2020
5%
346
-5%
(346)
USD/MYR
Increase/
(decrease)
in MYR rate
Effect on
profit
before tax
2021
20%
13,800
-20%
(13,800)
2020
20%
20,542
-20%
(20,542)
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, 2021 or December 31, 2020. The
expected cash inflows from trade and other
receivables maturing within two months total
USD 73,689 thousand (December 31, 2020:
USD 54,576 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, 2021 and December 31, 2020.
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, 2021.
The X-FAB SE Group’s other bank loan agreements do
not include requirements to comply with externally
imposed capital requirements, for example
71
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 4.46% (December 31, 2020: 0.02%
and 4.82%). 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 from 2021 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
2021
2020
Net book value January 1
25,278
30,856
Additions
2,316
240
Depreciation
(4,339)
(5,186)
Disposals
—
—
Reclassifications
1,160
(632)
Net book value December 31
24,415
25,278
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
2021
2020
Minimum
leasing
payment
Present value
Minimum
leasing
payment
Present value
2022
6,015
5,380
2023–2025
27,062
24,877
2021
5,694
4,932
2022–2024
22,526
19,704
Total
33,077
30,257
28,220
24,636
Interest
(2,821)
(2,821)
(3,584)
(3,584)
Liability
30,256
27,436
24,636
21,052
Annual Report 2021 | 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 616 thousand (2020: USD 604 thousand) and
expenses relating to leases of low-value assets
(excluding short-term leases of low-value assets)
amounted to USD 18 thousand (2020: USD 23
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
2021
2020
Trade accounts receivable
due from Melexis group
companies
22,224
19,109
Trade accounts receivable
due from Anvo-Systems
—
1,277
Trade accounts receivable
due from M-MOS group
companies
2,961
3,666
Trade accounts receivable
due from X-Celeprint
32
92
Total
25,217
24,144
in thousands of U.S. dollars
2021
2020
Trade accounts payable due
to Melexis group companies
178
108
Trade accounts payable due
to M-MOS group companies
59
19
Trade accounts payable due
to XTRION
21
14
Trade accounts payable due
to Sensinnovat
96
188
Other
22
80
Total
376
409
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
2021
2020
Sales to Melexis group
companies
254,362
186,138
Sales to M-MOS group
companies
16,386
10,907
Sales to Anvo-Systems
50
62
Sales to X-Celeprint
—
187
Sales to X Display Company
Technology
297
104
Property rental and other
income from Melexis group
companies
2,211
3,618
Other income from M-MOS
122
413
Gain on derecognition of
liability to Sarawak
Technology Holdings Sdn.
Bhd
—
33,551
Total
273,428
234,980
Further information on the gain on derecognition of
the financial liability to Sarawak Technology Holdings
Sdn. Bhd reported in 2020 is provided in notes 7.10 and
13.1.
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
2021
2020
Services provided by Melexis
group companies
533
2,332
Services/purchases provided
by M-MOS group companies
400
287
Services provided by X-
Celeprint
8
—
Services purchased from
Sensinnovat
302
308
Services purchased from
ESA
159
183
Warranty cost Melexis group
2,036
968
Interest from loan from
Sarawak Technology
Holdings Sdn. Bhd.
—
1,746
Total
3,438
5,824
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
2021
2020
Short-term employee
benefits
1,302
1,157
Short-term employee
benefits for members of
management that are not on
the payroll of the Company
(CEO and CFO)
655
455
Directors’ compensation
205
260
Total
2,162
1,872
The persons with key management positions as
referred above as of December 31, 2021 include the
Group’s CEO, COO, CTO, CFO, the CEO of X-FAB
Dresden, the CEO of X-FAB Sarawak, the CEO of     
X-FAB Texas, 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 79
thousand (2020: USD 70 thousand). 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
2021
2020
Purchase commitments
for:
Property, plant, and
equipment
67,621
9,988
Intangible assets
383
459
Material and services
9,512
36,660
Total
77,516
47,107
Purchase commitments mainly refer to purchase
orders placed for investments in technical machinery.
In addition to the presented figures above, the Group
was committed to invest USD 120 million (EUR 100
million) in property, plant, and equipment at the
Corbeil-Essonnes site over a ten-year period from
October 1, 2016, the date of its acquisition by the
Group. This commitment has now been met in full; the
outstanding commitment at December 31, 2020
amounted to USD 10 million.
Annual Report 2021 | X-FAB consolidated financial statements
74
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.
Specifically, X-FAB GmbH, 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 136.1 million
(December 31, 2020: USD 134.3 million); the retention
requirements have not yet been fulfilled in full for
grants and subsidies received totaling USD 13.2 million
included in that total.
13.2 Unresolved legal disputes and claims
X-FAB is currently involved in a legal dispute with one
of its suppliers. No provision is made for this dispute as
no reliable estimate can be made concerning the
outcome of the dispute. The Group is not aware of the
threat of any other 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:
2021
2020
Production
3,318
3,276
Research and development
305
321
Sales, marketing, and
administration
264
258
Trainees
102
95
Total
3,989
3,950
The total number of employees employed by the
Group at December 31 was as follows:
2021
2020
Production
3,430
3,213
Research and development
305
313
Sales, marketing, and
administration
270
255
Trainees
118
105
Total
4,123
3,886
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%
X-FAB Dresden Grundstücks-
Vermietungs- gesellschaft mbH & Co. KG
Dresden, Germany
Real estate
94.90%
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
2021
2020
Audit cost
KPMG
392
351
Other audit firms
61
115
Other services
KPMG
36
32
Total
489
498
14 Events after the reporting period
At this point in time, X-FAB is not significantly
impacted by the conflict in Ukraine and the measures
taken against Russia as a consequence thereof. X-FAB
has only very limited revenues from Russia. So far,     
X-FAB’s subsidiary in Russia has not been impacted
and continues to operate its normal activities of
providing design services internally. We do, however,
closely monitor economic sanctions that are being
issued and take appropriate actions to comply. While
X-FAB does not source any raw materials from Russia
directly, its suppliers may be affected by a crisis-driven
shortage of commodities coming from Russia, which
may cause disruptions in supply.
Tessenderlo, March 24, 2022
Managing Director, CEO
Sensinnovat BV
Represented by Rudi De Winter
CEO
Annual Report 2021 | X-FAB consolidated financial statements
78
79
6. CORPORATE SOCIAL
RESPONSIBILITY AT X-FAB
6.1 Scope
This chapter documents X-FAB’s environmental and
social performance during the 2021 financial year. The
environmental and social performance figures
encompassed in this chapter have been prepared
according to 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, environment matters, anti-
corruption and bribery, supply chain, and the Covid-19
situation. 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 2021
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.
Annual Report 2021 | Corporate social responsibility at X-FAB
80
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
nondiscrimination 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 2021 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 Stakeholder engagement
For several years now, sustainability has been a driving
force behind X-FAB’s development, not only within the
broad range of X-FAB´s products but also with
respect to several 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 conducts business.     
X-FAB promotes volunteer activities by its employees.
X-FAB thereby contributes to the well-being and long-
term development of affected societies, in particular
regarding working conditions, social and environmental
compatibility, transparency, collaboration, and dialog.
In 2021, X-FAB increased the share of collective
bargaining contracts in Europe to 98% by introducing a
new collective bargaining agreement at its Dresden
site.
In April 2021, employees from X-FAB Texas
participated in the National Child Abuse Awareness
month by wearing something blue during office hours.
Fig. 6.2: Employees of X-FAB Texas participating in National
Child Abuse Awareness month
X-FAB promotes state-of-the-art technologies and
their advancement through its involvement in
numerous industry associations and other
organizations.
81
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
•ESIA – European Semiconductor Industry
Association
•FOA – Fab Owners Alliance
•Forderkreis Mikroelektronik (Society for the
Promotion of Microelectronics, Germany)
•GSA – Global Semiconductor Alliance
•IVAM Microtechnology Network, Germany
•Medicen – Medical Competitiveness Cluster, Paris
region
•Minalogic – Competitiveness cluster for digital
technologies in the Auvergne Rhone Alpes region in
France
•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)
To achieve X-FAB’s mission, good and effective
communication with all stakeholders is essential. The
following stakeholders were identified: customers,
employees, investors, suppliers, and local communities.
Particular focus in 2021 was on the external
employment market.
X-FAB launched a new employer branding campaign
aimed at attracting new talents to support X-FAB’s
future growth. X-FAB regularly takes into account the
feedback from stakeholders to improve its reporting.
Figure 6.3 shows the different channels X-FAB is using
to communicate about its activities.
Annual Report 2021 | Corporate social responsibility at X-FAB
82
Fig. 6.3: Stakeholder engagement
6.1.2 The Covid-19 pandemic
In 2021, the world was continuously affected by the
Covid-19 pandemic. People became accustomed to
following rules and regulations established by
governmental authorities. At each of its sites, X-FAB
offered medical support as well as opportunities for
vaccination to its employees. This offer was very well
received, especially at our location in Kuching.
Through the implemented measures, X-FAB
successfully protected its employees against
infections and was able to continually run operations
throughout the year. Rigid social distancing and
hygiene rules were established, and wearing a face
mask at work became mandatory in most of X-FAB`s
locations. At the same time, X-FAB closely cooperated
with local authorities to ensure compliance with all
required procedures and measures to minimize
infection transmission.
Fig. 6.4: Photo wall as part of X-FAB Sarawak’s vaccination
campaign
83
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. In addition, each site defines
specific environmental goals, which are renewed
annually and implemented to continuously 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 the biodiversity is minimized.
For 2021, 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
272.28 million cm2). X-FAB Itzehoe is not included as it
is part of a joint site with only aggregated data
available. However, compared to all other sites, the
material and energy consumption as well as the
corresponding output of waste and gases are not
material.
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.
There was a slight increase in 2021 total waste
generation compared to 2020 due to increased
production output. This also led to a higher level of
waste recovery of 84.7% compared to 80% in 2020.
Fig. 6.5: Amount of waste by type and disposal method
normalized to the total wafer area sold (tons per million cm2
wafer produced)
X-FAB pursues permanent environmental objectives
to decrease its overall environmental impact. Some of
the activities carried out are:
•an annual reduction in the use of the chemical NMP
of approximately 800kg in polyimide processing
through substitution, as NMP is a critical substance
under EU REACH regulations (Erfurt);
•continuation of the biocide savings program
launched in 2018 with the installation of a UV
reactor in the cooling water system. In 2021, biocide
consumption was reduced by 10% (approximately
20kg per year) (Dresden);
•replacement of an ineffective screw compressor in
the CDA plant, achieving energy savings of about
USD 30,000 per year (Dresden);
Annual Report 2021 | Corporate social responsibility at X-FAB
84
•reduction of fluoride sludge waste by 50% from
50 tons/month and reduce cost from USD 41/ton
to approximately USD 6/ton for the slurry sludge
(Kuching);
•reduction of the amount of hydrochloric acid (HCl)
and caustic used by 5% from the previous three
years’ average of HCl per the amount of industrial
waste discharged, providing a cost saving of
USD 59,557 (Lubbock); and
•increasing the recycling rate by 3% in 2021
(Lubbock).
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 2021, X-FAB’s global energy consumption was
at about 503 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 74% and the share of high-carbon
sources, such as oil, gas, coal, biofuel, etc., was at 26%.
The split for X-FAB Sarawak is based on data for 2020,
as it is the most recent data available from the local
electricity provider.
Fig. 6.6: 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 the daily work. Across the
Company, different activities and projects exist to
reduce energy consumption, which are part of the
aforementioned annually renewed environmental
goals.
X-FAB’s has a permanent ongoing objective to
improve its energy efficiency and to reduce energy
consumption at all of its locations and a range of
activities and projects are being undertaken to achieve
this, illustrated by the following examples of projects
completed during the 2021 financial year:
•optimization of a hydraulic switch to improve chiller
efficiency, which led to annual savings of
USD 146,050 and a decrease in energy
consumption of 1,000 MWh with a reduction of
300t CO2 per year. This was achieved by installing
additional flow meters at the hydraulic switch as
well as frequency converters on all chillers’ supply
pumps (Erfurt);
•replacement of 30-year old cooling towers
resulted in annual savings of USD 30,000, a
decrease in energy consumption of 275,000 kWh
per year with a reduction of 213t of CO2 per year
(Erfurt); and
•replacement of potentially defective 20kV cables
that were damaged from a power blackout incident
(Dresden).
Such environmental goals are communicated during 
X-FAB’s annual EHS week taking place at all sites.
Figure 6.7 shows the power consumed at all X-FAB
sites over the past four years. Data is not available for
France for 2018 and for Itzehoe for the entire period
shown.
85
Fig. 6.7: Power consumption of all X-FAB sites from 2018 to
2021 (in GWh)
6.2.2.2 Water
In 2021, X-FAB’s production consumed roughly 17 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
rates in 2021.
Amount in liter/cm2
From a river
1.65
Ground water
4.95
Local drinking water supplier (city
council)
10.53
Total water withdrawal
17.13
Fig. 6.8: Total water withdrawal by source
Fig. 6.9: Total water consumption (1,000 m3 per million cm2
wafer produced) 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 6.10 lists the 2021 total consumption of
these gases.
Gas
Amount in kg
CHF3
934
CF4
3,276
C4F8
599
C3F8
141
C2F6
22,574
SF6
2,558
NF3
18,050
N2O
66,626
Fig. 6.10: Gas emissions by weight
Fig. 6.11: Three-year comparison of PFC gas consumption
(kilogram per million cm2 wafer produced)
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 also a slight increase in PFC gas
consumption in the last year due to higher production
rates.
Customer goods deliveries are handled by customers
directly.
Notable improvements regarding the emission of
greenhouse gases in the reporting period were:
•the cancellation of all cross-site workshops
continued in 2021 and the resulting general
reduction in travel activity resulted in a decrease of
greenhouse gas emissions as well as savings in
Annual Report 2021 | Corporate social responsibility at X-FAB
86
excess of USD 1.5 million compared to pre-
pandemic levels;
•mass concentration of total carbon in the exhaust
air was below 50 mg/m3 (according to the German
air pollution control regulation TA Luft) to reduce
total carbon emissions in photolithic exhaust air
(Erfurt); and
•energy efficiency programs helped to reduce CO2
emissions; refer to section 6.2.2.1 Energy efficiency.
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.
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
2021 underwent the mandatory employee orientation
of which human rights policies are a crucial focus point.
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
2021.
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 will be even better
protected with a corresponding global procedure.
Employee statistics
At the end of 2021, X-FAB had around 4,100
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.
Location
Absolute # of
employees
Percentage of
male employees
[%]
Absolute # of
male employees
Absolute # of
female
employees
Percentage of
female
employees [%]
North America
442
74.0
327
115
26.0
Europe
2,315
75.1
1,739
576
24.9
Asia
1,319
66.0
871
448
34.0
TOTAL
4,076
72.1
2,937
1,139
27.9
Fig. 6.12: Number of employees (without trainees) by region and gender at the end of 2021
87
In line with the strong demand in semiconductors the
number of employees increased from 2020 to 2021 by
277. The growth in the number of full-time equivalent
employees (FTEs) was mainly driven by the strong
focus on employer branding as well as various activities
to hire qualified staff.
In particular, X-FAB is aiming at increasing its share of
female employees. The share of female employees is
constantly increasing in all regions X-FAB is operating
in. It increased from 27% in 2020 to 28% in 2021 for the
entire Group.
Fig. 6.13: Share of male and female employees by region 2019–
2021
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. 93% of employees
hold a permanent employment contract. Less than 1%
of staff are contract workers (borrowed).
The number of part-time contracts stayed the same as
in 2020.
The full “Flex@work” policy was deployed at all X-FAB
locations, so 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. This policy will become a
global standard for X-FAB employees independently
from the pandemic.
Location
Gender
Temporary/
fixed term
Permanent
employees
Contract
workers
Trainees/
intern ships
Full-time
Part-time
North America
Male
0
296
31
0
325
2
Female
0
96
19
0
115
0
Europe
Male
163
1,573
2
97
1,655
83
Female
56
520
1
24
442
135
Asia
Male
32
839
0
0
871
0
Female
38
410
0
0
448
0
TOTAL
Male
195
2,708
33
97
2,851
85
Female
94
1,026
20
24
1,005
135
Fig. 6.14: Employment contracts by type, region, and gender as at year end 2021
About 98% of all contracts in Europe are collective
bargaining contracts. In 2021 the site in Dresden was
integrated in the German-wide collective bargaining
agreement. This was the final step to align working
conditions between the German X-FAB sites. In other
regions of the world this concept is not common, and
therefore, there are no collective bargaining
agreements in place.
In 2021, 628 new employees were hired, 70% of them
being male and 30% being female. A large portion
relates to graduates having gained several months
practical experience at X-FAB Sarawak in the context
of a government program. The majority of newly hired
employees are younger than 35 years. The turnover
rate in 2021 was at 4% up from 3% in the previous year.
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Location
Gender
<35 yrs
36–50 yrs
51–60 yrs
> 60 yrs
Total
North America
Male
46
17
7
1
71
Female
18
14
2
0
34
Europe
Male
204
65
10
1
280
Female
68
24
9
1
102
Asia
Male
75
11
0
0
86
Female
52
3
0
0
55
TOTAL
Male
325
93
17
2
437
Female
138
41
11
1
191
Fig. 6.15: Newly hired employees (including contract workers and without trainees) by age and gender in 2021
Location
Gender
<35 yrs
36–50 yrs
51–60 yrs
> 60 yrs
Total
North America
Male
7
13
8
0
28
Female
7
8
1
0
16
Europe
Male
167
47
14
4
232
Female
53
18
5
1
77
Asia
Male
30
11
4
0
45
Female
14
1
0
0
15
TOTAL
Male
204
71
26
4
305
Female
74
27
6
1
108
Fig. 6.16: Number of employees (excluding trainees and retirements) who have left X-FAB in 2021 by age and gender
X-FAB conducts an employee engagement survey,
referred to as Barometer, on a regular basis. In 2021, X-
FAB has done a Barometer survey and achieved a
response rate of 73%. The results indicated some
improvement potentials which are recognized by X-
FAB management. Action teams were established on a
global as well as on local levels to review and discuss
actions and initiatives. This work will continue in 2022.
The average age is different in each location, ranging
from an average of 37 years in Asia to an average of
46 years in North America.
Location
Average
age of all
employees
Average
age of male
employees
Average
age of
female
employees
North America
46.0
47.0
43.0
Europe
42.4
42.3
42.3
Asia
36.9
38.1
34.6
TOTAL
41.8
42.4
40.0
Fig. 6.17: Average age by location and gender in 2021
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
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.
To strengthen individual development and drive
performance improvement, 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 its individual, the site’s,
the department’s and the Company’s goals. Several
comprehensive trainings were held to raise awareness
and to teach all staff how to use the process for
feedback and performance improvements.
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.
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
89
into the daily work of every X-FAB employee. Over the
whole year all training was held virtually, which included
internal as well as external training. In total, the amount
of training hours stayed flat compared to 2020.
Location
Gender
<35 yrs
36–50
yrs
51–60
yrs
> 60 yrs
North
America
Male
24
24
24
12
Female
24
24
12
12
Europe
Male
23
19
15
17
Female
20
18
12
11
Asia
Male
12
6
6
0
Female
12
6
6
0
Fig. 6.18: Average training hours per year and employee in 2021
In 2021 X-FAB finished the two-and-a-half-year
education program for professionals and talents from
all X-FAB sites designed to develop project
management and personal skills. This program
concentrates on the areas of “personality and
leadership,” “project management,” “quality
management,” “strategic thinking,” and “cultural
awareness.” Sixteen employees from all X-FAB
locations started with the program. Alongside their
training they worked on several strategically important
projects for the X-FAB Group. In 2021 all training for
that program as well as the closing of the program was
held virtually. Feedback collected from the participants
will be used to improve the program in 2022.
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 2021 X-FAB promoted 10 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.
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 2021
X-FAB’s overall patent portfolio amounts to more
than 420 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 skill 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 100 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 real X-FAB employees and
their individual stories. Site-specific advertisement
campaigns aimed at raising brand awareness in the
public at each location. A specific Instagram account
with biweekly updates was launched and each month
employee focused stories are posted in the corporate
LinkedIn account.
Fig. 6.19: The faces of X-FAB’s new employer branding
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
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90
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 2021 a collective bargaining
agreement applicable to German employees was
introduced and more than 480 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.
Even during significant pandemic restrictions, X-FAB
ensured that local cafeterias stayed open for the well-
being of the employees. Even 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.
In 2021 each X-FAB employee was rewarded with an
extra bonus at the end of the year, honoring the
extraordinary efforts during the coronavirus pandemic.
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.
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 December 2021, X-FAB hosted its traditional
Christmas donation campaign. The beneficiary was the
France Alzheimer Association, which provides help and
support to affected families and finances innovative
projects leading to better treatments in the future.   
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 got 10,000 clicks in total.
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.
In 2021 X-FAB supported several social donation
campaigns in Kuching, Sarawak. X-FAB donated about
110 food baskets and 116 boxes with face masks for the
“Do Nation” campaign to villages in Serian, Sarawak.
Another donation was sent to The Salvation Army
Children’s Home to fulfill the wish lists of 52 kids
including stationary, household expenses, food and
drinks as well as a Christmas tree with decorations.
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.
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. 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
91
the SEMI High Tech University for high school
graduates considering a future career in a science,
technology, engineering, or mathematics (STEM) field.
In 2021 several activities were still put on hold or
converted to virtual collaboration activities due to the
Covid-19 regulations in place.
Back in 2019, X-FAB France, as the only French
semiconductor company was invited to participate in a
Pan-European project, funded by the European
Commission called METIS (microelectronics, training,
industry, skills). As part of ERASMUS+ the 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
2021 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. Most of these activities
were put on hold or were stopped in 2021 but X-FAB
will continue to support these programs in the coming
years.
In 2021 X-FAB mainly 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
helps 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 the 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. Most of these events were held virtually and
therefore social media has been playing a vital role for
the external communication. 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 training and instruction 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 35
accidents in 2021, which caused 7,194 work hours lost,
resulting in a frequency rate of 6.42 and a severity rate
of 164.95. There was one fatal work-related accident in
2021. An employee of X-FAB Texas was killed during
maintenance work done at the deionized water system.
Safety improvement programs that took place in 2021:
•replacement of 208-volt switch gears to reduce
the potential of sporadic triggering and/or
malfunction in the event of a short circuit, therefore
preventing the risk of fire (Dresden); and
•replacement of control system facility as previous
system has become obsolete (Dresden).
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.         
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92
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
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 2021.
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
93
compliance with X-FAB’s list of banned substances and
have to provide transparent information regarding
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 2021, 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 17 different suppliers for strategic materials (e.g.
chemicals, gases, wafers) or services, one located in
the United States, six in Europe, and ten 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
Chemicals
Germany
Supplier audit / rating A
Supplier 2
Photochemicals
Netherlands
Supplier audit / rating A
Supplier 3
Photochemicals
Belgium
Supplier audit / rating A
Supplier 4
Reticles
Germany
Supplier audit / rating A
Supplier 5
Chemicals
Germany
Supplier audit / rating A
Supplier 6
Wafers
Japan
Supplier audit / rating A
Supplier 7
Gases
Singapore
Supplier audit / rating B
Supplier 8
Reticles
United Kingdom
Supplier audit / rating A
Supplier 9
Photochemicals
Japan
Supplier audit / rating A
Supplier 10
Chemicals
Japan
Supplier audit / rating A
Supplier 11
Chemicals
Japan
Supplier audit / rating A
Supplier 12
Wafers
United States
Supplier audit / rating A
Supplier 13
Wafers
China
Supplier audit / rating A
Supplier 14
Chemicals
South Korea
Supplier audit / rating A
Supplier 15
Gases
South Korea
Supplier audit / rating B
Supplier 16
Chemicals
Japan
Supplier audit / rating B
Supplier 17
Gases
Malaysia
Supplier audit / rating A
Fig. 6.20: Supplier audits performed by X-FAB in 2021
Annual Report 2021 | Corporate social responsibility at X-FAB
94
Supplier Corrective Action Requests (SCAR)
In 2021, in total 61 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 2021, seven 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
2021 X-FAB has continued to deploy, as a pilot, the
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 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.
95
To test and further improve X-FAB’s information
security management system, X-FAB Semiconductor
Foundries GmbH and X-FAB Dresden GmbH & Co. KG
are certified according to ISO 27001 with regards to
customer data. In 2020, X-FAB Global Services GmbH
also received ISO 27001 certification.
Cybersecurity
As X-FAB employees are the first line of defense and
the human firewall protecting X-FAB from potential
cyber threats, X-FAB IT has organized cybersecurity
awareness trainings for all employees. By adopting the
KnowBe4 Automated Security Awareness Training
Solutions, cyber security awareness training, including
awareness of phishing campaigns, is rolled out regularly
to ensure employees are aware of and able to detect
cybersecurity threats. Apart from increasing
awareness, employees are encouraged to report any
suspicious email received to [email protected] to
verify the authenticity of an email and to reduce any
potential phishing scams.
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 2021, 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 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 have been
defined through delegated acts.
On December 9, 2021, the EU adopted the Delegated
Act 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. 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.
These new reporting requirements are being
introduced gradually. For 2021, companies only need to
disclose the proportion of their business activities that
is eligible under the taxonomy with respect to 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 being under development.
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
Annual Report 2021 | Corporate social responsibility at X-FAB
96
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.
However, based on the eligibility criteria, X-FAB’s
products and technologies must directly enable
substantial life-cycle GHG emission reductions in other
sectors of the economy compared to the best
performing alternative technology/product/solution
available on the market. In this context, reference is
made to the Draft Commission notice on the
interpretation of certain legal provisions of the
Disclosures Delegated Act under Article 8 of the EU
Taxonomy Regulation on the reporting of eligible
economic activities and assets which states that “for
the first year(s) of eligibility reporting in accordance
with Article 10 of the Disclosures Delegated Act, those
activities [i.e. enabling activities] can only be
considered as eligible-to-be-transitional or eligible-to-
be-enabling and reported, i.e. marked as such, on a
voluntary basis.”
Due to the insufficient guidance to determine under
which conditions this aim is met, X-FAB opts to have
0% of the Company’s total net sales, capex, and opex
disclosed as eligible.
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98
99
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 aligned its Corporate Governance Charter with
the 2020 Code on Corporate Governance in the first
quarter of 2020. 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.
Annual Report 2021 | Corporate governance statement
100
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 and may be comprised of a maximum of
nine 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
Chairman 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
Datuk Amar Ahmad Tarmizi Bin Haji
Sulaiman (until April 29, 2021)
59
/
Non-executive director
Hasmawati Binti Sapawi (from April 29,
2021 until July 27, 2021)
52
/
Non-executive director
Dato Sri Wan Lizozman Bin Wan Omar
(from July 27, 2021)
57
2025
Non-executive director
Sensinnovat BV
(Represented by Rudi De Winter)
61
2025
Managing Director, CEO
Roland Duchâtelet
75
2025
Non-executive director
Thomas Hans-Jürgen Straub
67
2025
Non-executive director
Tan Sri Datuk Amar Dr. Hamid Bin Bugo
76
2025
Non-executive director (Chairman from 27
July 2021)
Aurore NV (Represented by Christine
Juliam)
61
2022
Non-executive and independent director
Christel Verschaeren
57
2025
Non-executive and independent director
Estelle Iacona
49
2025
Non-executive and independent director
Vlinvlin BV (Represented by Ling Qi)
51
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.
Roland Duchâtelet started his career serving in various
positions in production, product development, and
marketing functions for several large and small
companies. He contributed to the start-up of two
other semiconductor manufacturers: Mietec Alcatel
(Belgium) from 1983 to 1985 as business
development/sales manager and Elmos GmbH
(Germany) from 1985 to 1989 as marketing manager.
Mr. Duchâtelet is the co-founder of the parent
company of X-FAB. He holds a degree in electronic
engineering and applied economics and an MBA from
the University of Leuven.
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
101
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 member of
several corporate and governmental agencies and
charitable organizations. After graduating with a
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 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 Petroleum Sarawak
Berhad and Sapura Resources Berhad.
Dato Sri Dr. Wan Lizozman Haji 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 Haji
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 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 until December 2014. In
2014, she also became Dean and Vice-President
Research and Industrial Partnership of the École
Supérieure d’Electricité (Supélec) in Paris. From 2015
until 2016 she served as Dean and Vice-President
Research of the CentraleSupélec. After four years as
Executive Vice-President for Academic Affairs,
research professor at CentraleSupélec, and member
of the board of École Centrale Casablanca, she
currently serves as Senior Vice-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. She has more
than 20 years of international business management
experience in China. After she won a provincial English
language competition among thousand contenders,
she organized international trade fairs and trade
missions for the city government of Shenyang, and was
the personal translator of the mayor of Shenyang. She
left politics to host a weekly TV program with news and
interviews of foreign expats in China. In 1996, her
media career went on as vice-president with
responsibility for international marketing and sales of
the animation film company OHY. In 2000, Ms. Ling Qi
married Belgian director Wouter Dierickx and founded
Sophie Animation Ltd. Currently, Ms. Ling Qi is CEO of
two mid-size multimedia and animation film companies.
Alongside her media business, Ms. Ling Qi has been
consultant for foreign invested companies in China and
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 UFSIA
Antwerpen.
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
Annual Report 2021 | Corporate governance statement
102
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
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 2021 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 2022; and
•the revolving credit facility.
Datuk Amar Ahmad Tarmizi Bin Sulaiman was excused
for two meetings and was represented by proxy at one
other meeting of the Board. Christel Verschaeren
could not attend one meeting, and Estelle Iacona 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 2022.
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 2021, 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 IT security, the new audit partner, and
the results of the internal audit. 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, Chairman; Aurore NV, represented by
Christine Juliam, independent director; Tan Sri Hamid
Bin Bugo, non-executive director; and Estelle Iacona,
independent director.
The Remuneration and Nomination Committee met
three times in 2021. During these meetings matters
such as the remuneration of the Executive
Management and the (re)appointment of directors
were discussed. All members of the Remuneration and
Nomination Committee attended all meetings.
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7.5 Executive Management
Composition
The Executive Management is composed of the following members:
Name
Age
Position
Rudi De Winter
61
Chief Executive Officer
Alba Morganti
53
Chief Financial Officer
Jörg Doblaski
43
Chief Technology Officer
Lee Boon Chun
52
Chief Executive Officer, X-FAB Sarawak
Dr. Jocelyne Wasselin
63
Chief Executive Officer, X-FAB France
Lloyd Whetzel
64
Chief Executive Officer, X-FAB Texas
Dr. Gabriel Kittler
43
Chief Executive Officer, X-FAB Erfurt
Rico Tillner
39
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 2021
for the directors and executives led to the effective
remuneration as shown in the table on the next page.
Roland Duchâtelet waived his right to receive any
remuneration as a non-executive Board member. In
2021 Vlinvlin BV (represented by Ling Qi) received
additional remuneration of USD 21,954 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 11,833
for his mandate on the supervisory board of X-FAB
Semiconductor Foundries GmbH. Sensinnovat BV was
reimbursed for expenses amounting to USD 7,234.
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.
Annual Report 2021 | Corporate governance statement
104
in U.S. dollars
Name, position
1. Fixed remuneration
2. Variable remuneration
Base salary
Fees
Other benefits
One-year
variable
Multi-year
variable
Datuk Amar Ahmad Tarmizi Bin
Haji Sulaiman, Non-executive
director
5,786.39
—
—
—
—
Hasmawati Binti Sapawi, Non-
executive director
4,328.55
—
—
—
—
Dato Sri Wan Lizozman Bin Wan
Omar, Non-executive director
7,634.72
—
—
—
—
Roland Duchâtelet, Non-
executive director
—
—
—
—
—
Thomas Hans- Jürgen Straub,
Non-executive director
17,749.65
—
11,833.10
—
—
Tan Sri Dr. Hamid bin Bugo, Non-
executive director
29,582.75
—
—
—
—
Aurore NV (Represented by
Christine Juliam), Independent
director
29,582.75
—
—
—
—
Christel Verschaeren,
Independent director
29,582.75
—
—
—
—
Estelle Iacona, Independent
director
29,582.75
—
—
—
—
Vlinvlin BV (Represented by Ling
Qi), Non-executive director
17,749.65
—
21,953.95
—
—
Sensinnovat BV, permanently
represented by Rudi De Winter,
Executive, CEO
295,822.75
—
7,234.47
73,956
73,957
Executive Management excl.
Sensinnovat BV
1,092,949.66
—
82,909.68
250,542.04
—
105
in U.S. dollars
Name, position
3. Extra-
ordinary items
4. Pension
expense
5. Total
remuneration
6. Proportion of fixed and
variable remuneration
Datuk Amar Ahmad Tarmizi Bin
Haji Sulaiman, Non-executive
director
—
—
5,786.39
Fixed:
100%
Hasmawati Binti Sapawi,
Non-executive director
—
—
4,328.55
Fixed:
100%
Dato Sri Wan Lizozman Bin Wan
Omar, Non-executive director
—
—
7,634.72
Fixed:
100%
Roland Duchâtelet, Non-
executive director
—
—
—
Fixed:
100%
Thomas Hans- Jürgen Straub,
Non-executive director
—
—
29,582.75
Fixed:
100%
Tan Sri Dr. Hamid bin Bugo,
Non-executive director
—
—
29,582.75
Fixed:
100%
Aurore NV (Represented by
Christine Juliam), Independent
director
—
—
29,582.75
Fixed:
100%
Christel Verschaeren,
Independent director
—
—
29,582.75
Fixed:
100%
Estelle Iacona, Independent
director
—
—
29,582.75
Fixed:
100%
Vlinvlin BV (Represented by Ling
Qi), Non-executive director
—
—
39,703.60
Fixed:
100%
Sensinnovat BV, permanently
represented by Rudi De Winter,
Executive, CEO
—
—
450,969.79
Fixed:
67%
Variable:
33%
Executive Management excl.
Sensinnovat BV
—
78,726.92
1,505,128.30
Fixed:
83%
Variable:
17%
2,161,465.10
Annual Report 2021 | Corporate governance statement
106
Application of the performance criteria
CEO
The variable remuneration for the CEO contains short,
medium and long-term elements:
•short term: 25% is based on performance criteria
measured over one financial year;
•medium term: 12.5% is based on performance
criteria measured over two financial years; and
•long term: 12.5% 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;
•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 McLean Report 2022 by IC
Insights (https://www.icinsights.com/). 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 2021 are shown in the
table below. In 2021 the EBIT was USD 77.2 million,
thereby outperforming the maximum performance
target of USD 10 million. This means that 100% of the
short-term cash bonus will be paid out.
Performance criteria
a)
Minimum threshold
performance (in USD tsd.)
a)
Maximum performance
(in USD tsd.)
a)
Measured performance
(in USD tsd.)
b)
Corresponding
remuneration
b)
Corresponding
remuneration
b)
Actual remuneration
outcome
Global business
performance
a)
$2,500
a)
$10,000
a)
$77,192
Relative weighting 50%
b)
$0
b)
$73,956
b)
$73,956
Total bonus
$0
$73,956
$73,956
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 2022 by IC
Insights as a reference value.
The results for performance year 2021 are shown in the
table below. In 2021, the revenue growth was 38%
compared to 2020. The industry average amounted to
18%. The revenue growth compared to 2019 was 30%
while the industry averaged 21%. This results in the
bonus calculation as depicted in the following table.
Performance criteria
a)
Threshold performance
a)
Measured performance
b)
Corresponding remuneration
b)
Actual remuneration outcome
Revenue growth over the last
year
a)
Revenue growth >18%
a)
38%
b)
$36,978
$36,978
Revenue growth over the last
two years
a)
Revenue growth >21%
b)
21%
b)
$36,978
$36,978
Total bonus
$73,957
$73,957
107
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 2021 are shown in the
table below. In 2021 the EBIT was USD 77.2 million,
thereby outperforming the maximum performance
target of USD 10 million. This means that 100% of the
short-term cash bonus that is linked to the operational
result of the Company will be paid out. Two members
of the Executive Management received a discretionary
bonus.
Performance criteria
a)
Minimum threshold
performance (in USD tsd.)
a)
Maximum performance
(in USD tsd.)
a)
Measured performance
(in USD tsd.)
b)
Corresponding
remuneration
b)
Corresponding
remuneration
b)
Actual remuneration
outcome
Global business
performance
a)
$2,500
a)
$10,000
a)
$77,192
Relative weighting 50%
b)
$0
b)
$113,887
b)
$113,887
Individual/team
performance
a)
Determined individually
a)
Determined individually
a)
Determined individually (incl.
discretionary)
Relative weighting 50%
+ Discretionary
b)
$0
b)
$113,887
b)
$136,655
Total bonus
$0
$227,774
$250,542
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.
Name
2017
2018
2019
2020
2021
Annual change of remuneration (Executive
management)
•Fixed remuneration
—
—
—
—
-4.1%
•Variable remuneration
—
—
—
—
+100%
Annual change in the developments and
performances (in thousands of USD)
•Performance criteria (EBIT)
50,489
32,919
-43,865
-14,617
77,192
•Net profit
89,758
22,554
-48,540
13,530
83,640
Annual change in the average remuneration of
employees on consolidated basis*
—
2.26%
-6.06%
0.91%
8.39%
*The average employee remuneration was calculated with the numbers as reported in note 6.6 (wages and salaries) in this annual
report (personnel expenses and average number of employees). Social security, pension, and benefit costs are excluded.
Annual Report 2021 | Corporate governance statement
108
In 2021 the ratio between the highest and lowest
remuneration was 81.7 to 1. The highest remuneration
of a member of the Executive Management used for
this comparison includes the base salary, pension, and
other benefits paid in 2021.
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
management contract with a member of the Executive
Management was terminated in 2021.
Use of clawback provisions
No clawbacks were applied in 2021.
Vote of the shareholders
The remuneration report for the financial year ended
December 31, 2020, was approved at the annual
shareholders’ meeting held on April 29, 2021, with a
99.0% majority of the 75.9% 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 2021, there have been no conflicts of interest for
which the procedure of Articles 7:96 or 7:97 BCCA
needed to be applied.
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 2021, 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.
109
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.
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.
Annual Report 2021 | Corporate governance statement
110
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
Articles of Association approved by the Shareholders’
Meeting on March 16, 2017 (i.e. April 26, 2017).
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 was valid for five years from
March 16, 2017 and, accordingly, expired on March
17, 2022.
By resolution of the Shareholders’ Meeting held on
March 16, 2017, 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
employees, directors, or consultants of the
Company 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 was valid until April 26, 2020.
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 remained in effect for a period
of three years from the date of the amendment to the
Articles of Association approved by Shareholders’
Meeting held on March 16, 2017 and, accordingly,
expired on March 17, 2020. 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
111
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 453,000, excluding
value-added taxes. Additional fees were charged in
2021 for other services amounting to USD 36,000
excluding value-added taxes. Non-audit related
services mainly relate to certification engagements
and tax compliance services. Reference is made to
note 7.7.
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 2021 | Corporate governance statement
112
113
114
115
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, 2021:
130,781,669
Market capitalization on December 31, 2021:
EUR 1,195,344,454.66
Annual Report 2021 | Shareholder information
116
Financial calendar
April 28, 2022
Publication of Q1 2022 results
Annual shareholders’ meeting
July 28, 2022
Publication of Q2 2022 results
September 6, 2022
Publication of Half-Year Report 2022
October 27, 2022
Publication of Q3 2022 results
Contact information
X-FAB Silicon Foundries SE
Investor Relations
Transportstraat 1
3980 Tessenderlo
Belgium
Phone: +32 1361 3627
E-Mail: [email protected]
Web: www.xfab.com
117
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
2021
2020
Operating income
Turnover
11,775
9,933
Operating charges
Cost of services and other expenses
(11,650)
(9,683)
Wages and salaries, social security costs and pension costs
(105)
(163)
Depreciation
(8)
(8)
Operating profit
12
79
Finance income
Income from financial fixed assets
56,371
50,212
Income from current assets
—
—
Other financial income
1,015
18
Finance costs
Debt charges
(19)
(1)
Other financial charges
—
(488)
Net financial result
57,367
49,741
Profit before taxes
57,379
49,820
Income tax
(316)
—
Profit for the period
57,063
49,820
Annual Report 2021 | X-FAB SE statutory accounts
118
Condensed non-consolidated statement of financial position
in thousands of EUR
December 31,
2021
December 31,
2020
ASSETS
Fixed assets
Other equipment
9
24
Financial assets
Affiliated companies
Investments in affiliates
927,250
847,250
Loans issued to affiliated companies
239
26,019
Total fixed assets
927,498
873,293
Current assets
Amounts receivable within one year
Other receivables
60,417
36,802
Cash and cash equivalents
16,133
35,991
Total current assets
76,550
72,793
Total assets
1,004,048
946,086
EQUITY AND LIABILITIES
Equity
Capital
Share capital - issued
657,457
657,457
Share premium
92,902
92,902
Reserves
Legal reserves
12,402
9,549
Reserve for treasury shares
562
562
Accumulated profits
234,900
180,690
Total equity
998,223
941,160
Current liabilities
Amounts payable within one year
Trade payables
5,825
4,810
Other current liabilities
—
—
Taxes
—
116
Accrued charges and deferred income
—
—
Total current liabilities
5,825
4,926
Total equity and liabilities
1,004,048
946,086
119
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 39%
of the Group’s revenue in 2021, while the Group’s top
three customers accounted for 49% of revenue and its
top five customers accounted for 55% 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 2021 | Risk factors
120
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 analog/mixed-signal ICs 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
analog/mixed-signal ICs. 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 2021, raw wafer costs accounted for 14% 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 is subject to risks associated with currency
fluctuations.
X-FAB records its financial results in US dollars but
receives revenues and incurs costs in a variety of
currencies, including euros and Malaysian ringgit.
Changes in the exchange rate of the US dollar to the
euro or Malaysian ringgit could result in translational
losses in a given year, as compared to prior operating
periods, or in a mismatch between local currency
expenses and US 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.
121
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.
•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.
Annual Report 2021 | Risk factors
122
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.
123
11. GLOSSARY
Analog M/S
Analog mixed-signal
AEC
Automotive Electronics Council
AIM
Automotive, industrial, medical
BCCA
Belgian Code on Companies and Associations
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
BiCMOS
Bipolar complementary metal-oxide-semiconductor
CAGR
Compound annual growth rate
CCC
Consumer, communications, computer
CDA
Compressed dry air
CMOS
Complementary metal-oxide-semiconductor
Company
X-FAB Silicon Foundries SE
DNA
Deoxyribonucleic acid
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.
EHS
Environmental, Health and Safety
Epi
Epitaxy, which is the process of depositing a thin layer of single
crystal material over a single crystal substrate
ERP
Enterprise resource planning
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
EV
Electric vehicle
Fab
Wafer fabrication facility
FSMA
The Belgian Financial Services and Market Authority
FTE
Full-time equivalent
GDP
Gross domestic product
GHG
Greenhouse gases
GRI
Global Reporting Initiative
Annual Report 2021 | Glossary
124
GVG
X-FAB Dresden Grundstücks-Vermietungsgesellschaft mbH & Co.
KG
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
kW
kilowatt
MEMS
Micro-electro-mechanical systems
METIS
Microelectronics training, industry and skills
MFI
X-FAB MEMS Foundry Itzehoe GmbH
M-MOS
M-MOS Semiconductor Sdn. Bhd.
MW
Megawatt
NPS
Net promoter score
NRE
Non-recurring engineering
NVM
Non-volatile memory
OECD
Organization for Economic Cooperation and Development
OEM
Original equipment manufacturer
PDK
Process design kit
REACH
Registration, Evaluation, Authorization, and Restriction of
Chemicals
RF
Radio frequency
PFC
Perfluorinated carbons
RFID
Radio-frequency identification
RoHS
Restriction of the use of certain hazardous substances
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
SiGe
Silicon germanium
SOI
Silicon-on-insulator
STEM
Science, technology, engineering and mathematics
TSV
Through-silicon via
125
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
Annual Report 2021 | Glossary
126
X-FAB Silicon Foundries SE
Investor Relations
Transportstraat 1
3980 Tessenderlo
Belgium