24 July 2013

IQE’s first-half revenue up 80% year-on-year to nearly £63m

In a trading update for first-half 201, epiwafer foundry and substrate maker IQE plc of Cardiff, Wales, UK says it expects first-half performance to be ahead of market expectations, with revenue approaching £63m, EBITDA (earnings before interest, taxes, depreciation, amortization, share-based payments and exceptional items) in excess of £10m and net debt below £39m.

This represents revenue growth of over 80%, and EBITDA growth of over 150% compared with first-half 2012. Sales growth was driven primarily by the wireless division, which included contributions from acquisitions including the MBE epiwafer manufacturing unit of RF Micro Devices Inc of Greensboro, NC, USA as well as the Kopin Wireless MOCVD-based heterojunction bipolar transistor (HBT) epiwafer manufacturing business of Kopin Corp of Taunton, MA, USA.

The wireless market has continued to grow in line with expectations, driven by the increasing adoption of more sophisticated communication devices including 4G and LTE smartphones and tablets, and newly launched dual-band WiFi (802,11ac). IQE says that these advanced products demand the highest levels of RF performance, which can only be delivered by compound-semiconductor-enabled front-end solutions.

The integration of the RFMD and Kopin acquisitions has been completed as planned, and work to realise the projected synergies is progressing well, says the firm. The board will provide a full update on this progress with the group’s half year results.

IQE adds that its photonics business is also making good progress, with several applications in transition from R&D into production. Notably, these include a number of vertical-cavity surface-emitting laser (VCSEL) products for consumer, industrial and medical applications such as: optical communications devices for short-range optical links; data centers and broadband delivery; optical devices for gesture recognition; gaming and cosmetic applications; and lasers for projection, medical and defence applications.

Advanced concentrated photovoltaic (CPV) solar technology, acquired through the investment in CPV cell maker Solar Junction Corp of San Jose, CA, USA and the exclusive seven-year license agreement, is now in the final stages of qualification. IQE remains on track for this business to achieve end-customer qualification and move into volume production during second-half 2013.

The development of advanced products including gallium nitride (GaN) materials and the IQE’s compound semiconductors on silicon projects are progressing well, says the firm. These are building a platform for further diversified growth in the rapidly growing markets for energy-efficient devices such as LEDs and power semiconductors over the next few years, says the firm.

“Our key markets have continued to demonstrate robust growth, driven predominantly by high levels of demand for 4G and LTE enabled smartphone and tablet products, along with accelerating requirements for photonic products and advanced sensor applications,” says chief executive Dr Drew Nelson. “Additionally, requirements for energy-efficient third-generation CPV solar products, solid-state lighting (SSL) and power-efficient GaN devices continue to increase strongly,” he adds.

“Our transactions with Solar Junction, RF Micro Devices and Kopin, over the last 18 months, represent significant milestones in the execution of our overall strategy and have significantly enhanced both our short- and long-term growth potential,” Nelson continues. “They are highly complementary, extending our critical mass and global leadership in wireless, and bringing additional capacity to service the emerging high-growth CPV market.

IQE expects to report its interim first-half 2013 results around mid-September. The board adds that it is confident the firm remains on track to achieve market expectations for the full year.

See related items:

IQE’s revenue grows 45% year-on-year in second-half 2012

IQE’s first-half 2012 profit slashed due to Q1 inventory correction

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