H1 trading update
24 July 2013
Cardiff, UK, 24 July 2013: IQE plc (AIM: IQE, “IQE” or the “Group”), the leading global supplier of advanced semiconductor wafer products and wafer services to the semiconductor industry, provides a trading update for the six months ended 30 June 2013.
The Board expects first-half performance to be ahead of market expectations, with first-half revenues approaching £63 million, EBITDA in excess of £10 million and net debt below £39m. This represents revenue growth of over 80%, and EBITDA growth of over 150% compared with the first half of 2012. Sales growth was primarily driven by the wireless division, which included contributions from the RFMD and Kopin acquisitions.
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). 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 successfully completed as planned. Work to realise the projected synergies is progressing well. The Board will provide a full update on this progress with the Group’s half year results.
The photonics business is also making good progress with several applications in transition from research and development into production. Notably, these include a number of advanced laser (VCSEL) products for consumer, industrial and medical applications such as: optical communications devices for short range optical links; data centres and broadband delivery; optical devices for gesture recognition; gaming and cosmetic applications; and lasers for projection, medical and defence applications.
Advanced solar (CPV) technology acquired through the investment in Solar Junction and the exclusive seven year license agreement, is now in the final stages of qualification. The Group remains on track for this business to achieve end customer qualification and move into volume production during H2 2013.
The development of advanced products including gallium nitride materials and the Group’s compound semiconductors on silicon projects are progressing well. They 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.
The Board is confident that the Group remains on track to achieve market expectations for the full year.
Dr Drew Nelson, Chief Executive of IQE, said:
“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. Additionally, requirements for energy-efficient third-generation CPV solar products, Solid State Lighting (SSL) and power efficient GaN devices, continue to increase strongly.
“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.
“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.
“Compound semiconductors are widely acknowledged as the key enabling materials that will drive a wide range of next generation technologies from high performance data transmission and management, to highly energy efficient products, including solar energy, SSL and power semiconductors.”
IQE expects to report its interim results around mid-September 2013.
IQE plc +44 (0) 29 2083 9400 Drew Nelson Phil Rasmussen Chris Meadows
Espirito Santo Investment Bank + 44 (0) 20 7456 9191 Richard Crawley Alastair MacLachlan
Canaccord Genuity + 44 (0) 20 7523 8000 Simon Bridges Cameron Duncan
College Hill +44 (0) 20 7457 2020 Adrian Duffield Kay Larsen
Note to Editors
IQE is the leading global supplier of advanced semiconductor wafers with products that cover a diverse range of applications, supported by an innovative outsourced foundry services portfolio that allows the Group to provide a 'one stop shop' for the wafer needs of the world's leading semiconductor manufacturers.
IQE uses advanced crystal growth technology (epitaxy) to manufacture and supply bespoke semiconductor wafers ('epiwafers') to the major chip manufacturing companies, who then use these wafers to make the chips which form the key components of virtually all high technology systems. IQE is unique in being able to supply wafers using all of the leading crystal growth technology platforms.
IQE's products are found in many leading-edge consumer, communication, computing and industrial applications, including a complete range of wafer products for the wireless industry, such as mobile handsets and wireless infrastructure, Wi-Fi, WiMAX, base stations, GPS, and satellite communications; and optical communications.
The Group also manufactures advanced optoelectronic and photonic components such as semiconductor lasers, vertical cavity surface emitting lasers (VCSELs) and optical sensors for a wide range of applications including optical storage (CD, DVD, BluRay), thermal imaging, leading-edge medical products, pico-projection, finger navigation ultra-high brightness LEDs, and high efficiency concentrated photovoltaic (CPV) solar cells.
The manufacturers of these chips are increasingly seeking to outsource wafer production to specialist foundries such as IQE in order to reduce overall wafer costs and accelerate time to market.
IQE also provides bespoke R&D services to deliver customised materials for specific applications and offers specialist technical staff to manufacture to specification either at its own facilities or on the customer's own sites. The Group is also able to leverage its global purchasing volumes to reduce the cost of raw materials. In this way, IQE's outsourced services, provide compelling benefits in terms of flexibility and predictability of cost, thereby significantly reducing operating risk.
IQE operates a number of manufacturing and R&D facilities across Europe, Asia and the USA. The Group also delivers its products and services through regional sales offices located in major economic centres worldwide.