Serenity: XFAB upgraded to 'Buy' rating, AI and photonic chips to unlock long-term growth potential

Serenity shares Kelper’s latest research report, which upgrades semiconductor foundry XFAB to a "Buy" rating. The report notes that Melexis’ demand is continuing to improve, and demand for silicon carbide (SiC), gallium nitride (GaN) and photonic chips spurred by AI is expected to offset cyclical fluctuations in the automotive sector. Western niche specialty foundries are also commanding higher valuation premiums, per the report. Data shows XFAB’s current 2027 EV/EBITDA multiple is just 4.8x, significantly below the peer median of 14.5x. Serenity says this signals XFAB’s core fundamentals are improving, though it is more optimistic about the growth potential of photonic chips that the market has not yet fully priced in. It points out that XFAB leads the EU’s PhotonixFAB project, which aims to build Europe’s silicon photonic industrial chain and advance large-scale manufacturing of photonic chips. The project is poised to benefit from rising data center optical communication demand driven by AI giants like NVIDIA. However, as relevant commercial orders have not yet landed on a large scale, traditional valuation models still struggle to capture this long-term growth logic.