HPQ Silicon, Wacker Chemie, Cabot: Three Stocks, One Material — and a Billion-Dollar Market Few Investors Know

HPQ Silicon: From the Lab to the Pilot Plant

Pyrogenic silica, also known as fumed silica, is one of those materials that almost no one knows about, yet hardly any everyday product can do without it. It is found in tires, silicones, paints, adhesives, toothpaste, and even spices, where it acts as an anti-caking agent to prevent clumping. Depending on the study, the global market is valued at at least USD 1.8 billion and is projected to grow to over USD 2 billion by 2030. According to the research firm MarketsandMarkets, this represents moderate but stable growth of around 3.5% per year. For decades, the market has been dominated by a few large corporations. This is precisely where the Canadian company HPQ Silicon aims to make an impact with a novel manufacturing process.

HPQ Silicon is based in Montréal and has developed the Fumed Silica Reactor (FSR), a process that produces industrial-grade fumed silica directly from quartz. Compared to conventional production methods, this is more cost-effective, less energy-intensive, and virtually CO₂-free—thereby protecting the environment. According to the company, the pilot program successfully produced commercially viable material of the "150" standard grade, accompanied by independent validation of the material's properties. On this basis, a commercial-scale technical review was conducted with PyroGenesis, a partner also based in Montréal, which has strengthened confidence in the economic viability of a future large-scale plant. A joint venture named HPQ Silica Polvere (HSPI) is planned to implement the project. Originally, an agreement to this effect was targeted for the end of the second quarter. The timeline has since shifted—and, for once, this is not bad news. According to HPQ, the successful validation of the pilot program has significantly increased interest among potential partners, which is why additional time is being allocated to address commercial, legal, and technical details.

Second Pillar: Batteries for Drones

HPQ is receiving government support. The Canadian Ministry of Natural Resources has pledged up to CAD 3 million in funding for the parallel silicon anode battery project, and the economic development agency Investissement Québec holds an 8% stake in the cleantech company. The commercialization of this second pillar is also moving full steam ahead. The silicon-anode batteries are being developed in collaboration with the French partner Novacium, in which the Canadians hold a 36.8% stake and for whose technology the company holds the exclusive North American marketing rights under the HPQ ENDURA+ brand. The current Gen4 cell generation significantly outperforms conventional graphite-anode batteries and has received both the safety certifications and those required for international transport. This clears two major regulatory hurdles. Marketing efforts will initially focus on drone and defense applications. Novacium has already developed battery packs specifically for drone manufacturers. This strategy is complemented by a memorandum of understanding signed in June with the French electric-drive specialist LN Innov, aimed at evaluating a Canadian platform that combines battery and motor technologies for the North American market.

CEO Bernard Tourillon presented further milestones at the 19th International Investment Forum.

https://youtu.be/V6FO2uPdQLI

Like the fumed silica division, the battery business is still in the customer qualification phase prior to the first commercial orders, which explains the low share price of just CAD 0.14 (currently trading between EUR 0.08 and 0.09 on German exchanges). The market capitalization of approximately CAD 68 million (EUR 42.5 million) is also on par with that of a startup. That sounds like a bargain: for the price of a micro-cap, investors get two future technologies on the verge of commercialization in one package.

Wacker Chemie: Tailwind from Washington

Wacker Chemie, headquartered in Munich, is one of the world's largest manufacturers of fumed silica under the HDK brand and, according to market researchers, ranks among the heavyweights in this industry alongside Evonik and Cabot. Unlike HPQ, however, Wacker is a more than 100-year-old corporation with a broad product portfolio that, in addition to fumed silica, also manufactures silicones, polymers, and, as its largest operational pillar, high-purity polysilicon for solar and semiconductor applications. Wacker's polysilicon business has recently made headlines. The US government has since imposed 15% tariffs on intermediate products containing polysilicon and established a price floor to protect domestic producers from cheap Chinese competition. Since Wacker operates its own polysilicon plant in Charleston, Tennessee, the company is considered one of the main beneficiaries. The share price had already reacted with sharp gains in the run-up to the decision.

Operationally, the environment remains challenging for the MDAX-listed company. Following a net loss of EUR 805 million in fiscal year 2025, the Munich-based company launched the PACE cost-cutting program, which calls for annual cost reductions of over EUR 300 million and the elimination of more than 1,500 jobs. The second-quarter figures show that the program is already bearing fruit. Revenue rose 7% year-over-year to EUR 1.52 billion, and operating profit increased by 85% to EUR 211 million, aided in part by a one-time effect related to pension provisions. For the full year 2026, CEO Christian Hartel raised the forecast for earnings before interest, taxes, depreciation, and amortization (EBITDA) to between EUR 625 and 750 million. The Group gained additional financial flexibility in May through the sale of approximately 2.1 million shares of its subsidiary, Siltronic, for EUR 188 million. In the battery anode materials segment, Wacker also holds a 25% stake in the British specialist Nexeon. At the current share price of EUR 94.15, this results in a market capitalization of approximately EUR 4.7 billion, which is below the expected 2026 revenue of EUR 5.7 billion. This suggests further upside potential; however, the 2026 price-to-earnings (P/E) ratio of over 50 is very high, driven by restructuring efforts.

Cabot: Finance Expert Takes the Helm

The US company Cabot, listed on the New York Stock Exchange, is also one of the world's largest producers of fumed silica through its CAB-O-SIL brand, but is primarily active in the industrial carbon black business for the tire industry. In the past quarter, Cabot generated revenue of USD 982 million, a 6.4% increase compared to the same period last year. The Performance Chemicals segment, which includes the fumed silica division, increased its operating profit by 19%—driven by higher volumes of battery materials and pyrogenic metal oxides. In the traditional tire carbon black business (Reinforcement Materials), however, earnings declined by 24% due to lower margins. Consequently, Cabot is strategically expanding its capacity for conductive battery additives and confirmed its expectation of an EBITDA contribution of approximately USD 40 million from the battery materials business in the current fiscal year. This growth area reflects the rising demand for electric vehicles and battery storage systems.

The reported quarterly earnings per share of USD 0.12 may appear weak at first glance, but are primarily attributable to one-time restructuring costs and an impairment charge related to the discontinued carbon black production in Argentina. On an adjusted basis, earnings per share of USD 1.67 were in line with analysts' expectations, and the full-year forecast was raised slightly—another parallel to Wacker Chemie, in addition to the ongoing restructuring. Cabot also announced a leadership change. Longtime CFO Erica McLaughlin will take over as CEO on October 1 from Sean Keohane, who is retiring after nearly 25 years. With a financial expert at the helm and tailwinds from the US government's tariff policy, the company is well-positioned for the future. At the current share price of just under USD 88.00, the market capitalization stands at around USD 4.5 billion, slightly above the expected annual revenue of USD 3.7 billion. In contrast, the P/E ratio, estimated at 13.8, is attractive both relative to Wacker and the broader US market.

Conclusion: Three Paths to the Same Raw Material

Wacker and Cabot demonstrate how large corporations divide up a niche market. In contrast, HPQ Silicon is entering the fray with a technologically promising reactor process that can make the production of fumed silica directly from quartz more cost-effective and energy-efficient. For investors, this means: Wacker and Cabot offer established business models, albeit with fluctuating margins, while HPQ Silicon represents a bet on a successful transition from pilot plant to commercial production. One thing is clear: should HPQ's string of research successes continue, this innovative company could catch the eye of the big players as a takeover target. Both Cabot and Wacker could finance an acquisition of this magnitude practically out of their petty cash.