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22 August 2007

 

IQE wins multi-year contract as preferred epi supplier to Anadigics

Substrate and epiwafer supplier IQE plc of Cardiff, UK says that its RF Business Unit has been selected by RFIC maker Anadigics Inc of Warren, NJ, USA to be its preferred supplier of GaAs epiwafers.

As part of a multi-year contract valued at about $50m over the first two years, IQE will provide a range of wafer products to be used to manufacture wireless chips for 3G handsets and base-stations, latest-generation (802.11n) Wi-Fi systems for infrastructure and Wi-Fi- enabled laptop computers, WiMAX, broadband fibre-optic systems, and satellite set-top-box applications.

“We have been working very closely with Anadigics over the last two years, to support their rapid growth plans,” says IQE’s chief executive, Dr Drew Nelson. In early July, Anadigics broke ground on construction of its second 6” GaAs wafer fab, sited in Kunshan New and Hi-Tech Industrial Development Zone, China. “This major contract award recognizes the unique advantages that IQE can offer as a pure-play wafer supplier, including multi-site, multi-platform manufacturing, a complete product range for the wireless communications industry, significant additional wafer capacity to support the rapidly growing demands of this and other customers, and advanced engineering support for current and future product development,” Nelson adds.

“We have chosen IQE as our preferred epi supplier on the basis of their diligent support of our rapidly growing business over the last two years, and in recognition of their wafer production strategy which gives us confidence that they can fully support our aggressive growth plans over the next few years,” says Anadigics’ president and CEO, Dr Bami Bastani.

Growth in wireless market drives IQE into operational profitability

For first-half 2007, IQE has reported revenues £23.7m, up 62% on £14.6m a year ago. As previewed in early July, this is also slightly above the market forecasts of £22.5m. This was despite the impact of a slow start in January and February and the exchange rate worsening from $1.78/£ to $1.97/£ (at a constant exchange rate, revenue would be up 80% to £26.2m).

Apart from the optoelectronics sector (about 20% of revenues) and electronics (about 6% of revenues), over 70% of revenue comes from the wireless sector (up from 60% a year ago). “Continued strong growth in the global wireless marketplace, combined with a shift towards high-end, fully featured handsets, high-speed Wi-Fi and satellite communications systems, all of which use increasing amounts of our products, have driven revenues ahead of expectations during the first half of the year,” says Nelson.

“Our position in the wireless market was substantially bolstered by the two major acquisitions made during 2006 [ the epiwafer foundries MBE Technology Pte Ltd of Singapore and IQE RF LLC of Somerset, NJ, USA (formally Emcore’s Electronic Materials & Device division)] .” By gaining exposure to the wireless power amplifier and the Asia-Pacific markets, the product and customer reach of IQE has been substantially enhanced, the firm claims. The higher profile has also generated interest with potential new customers. The acquisitions have been integrated smoothly and and have performed well ahead of management expectations, the firm adds. Indeed, IQE also announced that it has negotiated a ‘very attractive opportunity’ to relocate the Singapore plant to a much larger cleanroom facility ‘at minimal capital cost’, involving significant Singaporean Government assistance, including the offer of tax-free status over the next 10 years. The relocation will enable ‘significant future capacity expansion’ to support the rapidly growing business in the Asia-Pacific region, particularly in China (where Anadigics is expanding).

In first-half 2007, gross profit tripled year-on-year from £1.3m to £3.9m . Earnings before interest, taxes, depreciation and amortization (EBITDA) were £1.3m, compared to a loss of £0.8m. As a result of the increased revenues and strong operational gearing, IQE has also moved from an operating loss of £1.5m into an operating profit of £0.1m. Net loss has been cut from £1.6m to £0.5m.

Nelson reckons that the move into operating profit is a key milestone in IQE’s continuing progress, and demonstrates the strength of the firm’s business model. “As more customers become cross-qualified at our various manufacturing locations worldwide, we will be able to leverage our additional manufacturing capacity, which we expect will result in continued strong growth.”

Also during first-half 2007, IQE was awarded R&D contracts worth about $4m. One, as part of a UK consortium, is to develop ultra-high-efficiency GaN-based LEDs for solid-state lighting. Other contracts include developing strontium titanium oxide on silicon epiwafers (STO/Si) using molecular beam epitaxy, and advanced material structures for increased processing speed in future silicon-based memory and logic ICs. IQE also says that it is progressing its terrestrial solar cell activities through customer-funded programmes.

See related items:

Anadigics reports ninth quarter of growth, up 8.7%, driven by 3G

IQE’s revenues move ahead of first-half forecasts

IQE-RF awarded Gold Subcontractor Status for high-quality service

Anadigics continues 40% year-on-year growth and cuts losses after shedding fiber-optic subsidiary

Anadigics to build 6-inch GaAs fab in China

Acquisitions and strong mobile handset market boosts IQE's revenues, but not without losses

Visit: http://www.iqep.com

Visit: http://www.anadigics.com