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2 September 2008


IQE reports growth in sales and profit

Epiwafer and substrate foundry IQE plc of Cardiff, Wales, UK has reported half year (ended 30 June) sales revenue of £30.2m, up 27% on H1/2007’s £23.7m and 14% over the last six months. Gross profit rose to £5.5m, up 42% on H1/2007’s £3.9m. IQE attributes its revenue growth to the high-speed wireless communications market, where wireless sales growth continues to outstrip growth in mobile device sales due to increasing GaAs content in 3G, smartphone and other high speed wireless systems.

“Our strong performance during the first half of 2008 reflects our robust strategy and focus on high growth high volume markets. In particular the wireless communications market, where 3G and “smartphone” technology is being rapidly adopted to meet the growing demand from users for advanced mobile features such as email, internet browsing and video streaming,” said Drew Nelson, IQE’s chief executive.

EBITDA before exceptional costs (relating to the relocation of the firm’s Singapore operations) increased by 135% to £3.6m compared with H1/2007. Operating profit was £1.6m before exceptional item (H1/2007: profit £0.1m), and £11,000 after exceptional item. Cash inflow from operations before exceptional items was £3.4m, compared with £0.4m inflow in H1/2007.

H1/2008 loss was £709,000, compared with £503,000 for the same period in 2007. Net debt increased to £15.7m, from £10.4m in H1/2007, but was lower than expected. With additional capacity being brought on-line in 2008, and the completion of the Singapore relocation in H2, IQE expects its net debt to be reduced in 2009.

IQE says that its product roadmap and strategy continues to be driven by four key market dynamics, all of which have high growth, high volume prospects. These are:

  • High speed mobile communications, including 3G, WiFi, WiMAX, WiBro, GPS and other wireless technologies.
  • Semiconductor lasers, for HD DVD, laser mouse, laser projection, gaming, and office and industrial applications.
  • Solar cells and LEDs.
  • Higher speed, more powerful microprocessors and higher speed, ultra high density memories (driving demand for new materials solutions based on silicon substrates, including the incorporation of compound semiconductors directly onto silicon substrates).

IQE is confident that its markets will be resilient to the global economic slowdown, and that the firm's trading in Q3/2008 will be in line with expectations. The growth in demand for IQE’s products is largely being driven by the increasing content of GaAs within mobile devices, which reflects the rapid adoption of 3G and smartphone technology. 3G handset sales currently represent about 12% of the general market, but are forecast to grow 52% in 2008, according to market research firm Gartner.

“The Board remains confident that the strong markets for our products as well as our high operational gearing will ensure that we remain on course to deliver strong growth in sales and profits for the full year,” says Nelson.

See related items:

IQE grows 26% year-on-year in Q1/2008

IQE’s New Jersey order book grows to record $20m

IQE wins contract extension as sole supplier to US wireless component maker

IQE’s 54% growth in 2007 drives return to operating profit

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