Investing.com -- Soitec shares are trading around 6% higher on Monday after Reuters reported that the French chip materials maker said it is tying customers into multi-year supply agreements with deposits and fixed pricing to capture surging demand for AI data center optics.
Around 80% of Soitec's capacity reservation agreements with photonics customers, more than 10 in total, should be signed within a week or two, chief executive Laurent Remont told Reuters, with the rest expected within a month.
The contracts fix a price and require a deposit tied to committed demand, which customers recoup if they take the agreed volume and forfeit if they fall short. Volumes above the agreed level are said to trigger fresh pricing discussions.
"That's a way for us to have our customer with skin in the game," Remont told Reuters, adding that customers must also share inventory data to prevent over-ordering aimed at keeping wafers from rivals.
The company told investors last month that photonics-SOI revenue would more than double this financial year from slightly above $100 million, implying more than $200 million, a level Remont now calls "absolutely a floor," according to Reuters.
Demand for silicon photonics has surged as hyperscalers increasingly use optical connections to move data inside AI infrastructure, where copper is constrained by power and performance.
Soitec supplies the substrate underpinning almost all silicon photonics chips, and UBS estimates it holds a 95% market share.
Remont said Soitec does not expect to need a new plant until around 2029, citing capacity levers across France and Singapore.
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