18 January 2012

IQE reports year-on-year growth in revenue and profits

In a trading update for full-year 2011, epiwafer foundry and substrate maker IQE plc of Cardiff, Wales, UK says that it expects revenue to exceed £75m, up on 2010’s £73m.

Earnings before interest, tax, depreciation and amortization (EBITDA) is expected to increase from last year’s record £12.6m to at least £13.7m. Net debt is expected to be less than £4m.

“2011 has been another positive year for the group, with increased sales and profits to record levels, despite challenging supply chain and macro-economic conditions,” says chief executive Dr Drew Nelson. “Our core business of wireless-related products for all forms of mobile communications is performing as expected, whilst new and emerging products for consumer, industrial and defence applications are generating demand across all our key markets,” he adds.

Sales grew rapidly in first-half 2011, driven by strong double-digit growth in the wireless and optoelectronics divisions. Growth in wireless sales reflected the increasing adoption and sophistication of portable devices such as smartphones and tablets using gallium arsenide (GaAs) technology, and the increasing adoption of gallium nitride (GaN) technology in high-power wireless applications such as radar and infrastructure, says IQE. Growth in optoelectronic sales was driven by a wide variety of applications including consumer, industrial and high-efficiency solar power applications.

As announced in October, second-half 2011 sales were adversely affected by inventory corrections in the supply chain related to market share swings amongst a couple of IQE’s key customers. These inventory corrections have unwound as expected, and should be fully resolved by the end of first-quarter 2012.

IQE says that its long-standing strategy to qualify multiple products with multiple customers across the entire supply chain went some way toward offsetting the impact of the shifts in market share. As further qualifications complete, the future impact of market share shifts will continue to diminish, the firm says.

New product qualifications have progressed well, with significant milestones now achieved, IQE notes. The firm has qualified its BiHEMT product with one of the top three Japanese mobile chip makers, which has recently announced a major expansion programme in the smartphone market. Sales under this qualification have started to ramp, and this customer is expected to move into IQE’s ‘top 10’ during second-half 2012.

IQE is also in the final stages of qualification of BiHEMT products with two of the leading wireless chip manufacturers globally and expects to ramp into production during second-quarter 2012. In addition, the firm is qualifying a number of next-generation wireless products with a significant number of customers.

Business is also being driven by increasing demand across IQE’s other core markets including advanced semiconductor materials for optoelectronic products, which continued to enjoy strong growth driven by a range of existing and emerging end-market applications that are expected to account for an increased proportion of IQE’s full-year 2012 revenue.

“We have added to our manufacturing capacity during the year and expect to benefit strongly from some significant operational achievements including best-in-class quality improvements to our products,” says Nelson. “This will enable improved customer output and increased throughput from our own production tools and lead to continued improvements in operational and financial metrics,” he adds.

“The board remains confident that IQE is well positioned to build further on its robust business model and powerful market position to deliver strong growth in 2012 and beyond,” Nelson concludes.

See related items:

IQE’s first-half 2011 growth driven by smartphones and diversifying opto business

IQE reports record revenue and higher-than-expected profit for 2010

IQE revenue grows 54% year-on-year to record £33m in first-half 2010

IQE expects first-half 2010 revenue up 50% year-on-year

IQE rebounds by 46% to record £31.2m revenue in second-half 2009

IQE expects second-half 2009 revenue 45% up on first half

See: IQE Company Profile

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