15 July 2010


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

In an interim trading update for first-half 2010, due to stronger-than-expected wireless product sales and rising demand for optoelectronic and silicon-based wafers, epiwafer foundry and substrate maker IQE plc of Cardiff, Wales, UK says that it expects first-half 2010 performance to be significantly ahead of market expectations, with revenue of at least £32.8m (up more than 50% on first-half 2009), earnings before interest, tax, depreciation and amortization (EBITDA) above £5.3m (up 178%, illustrating the group’s powerful operational leverage), and retained profit of more than £2m.

First-half growth was driven by good recovery in the wireless market, with particularly strong demand for smartphones. IQE achieved higher-than-expected sales in the normally weak first quarter, with demand accelerating in Q2 and looking robust for the remainder of the year.

Demand increased strongly for optoelectronic products, particularly IQE’s vertical-cavity surface-emitting laser (VCSEL) technology, which it believes will soon play a key enabling role in a number of high-volume consumer applications. These notably include finger navigation, optical heating, internal interconnectors and external optical connectors such as active optical cables (AOCs) and Intel’s Light Peak technology, which will provide data transfer speeds 10–200 times faster than existing connectors such as USB cables.

In addition, demand continues to grow strongly for wafers to create energy-efficient products such as concentrator photovoltaics (CPV) based on compound semiconductors as well as light-emitting devices based on gallium nitride, with notable milestones achieved in bringing both these products to mass markets.

First-half performance was also boosted by a return to growth for IQE’s silicon-based epitaxy services for high-performance electronic products, with a high level of interest in new products such as germanium on insulator (GeOI), launched in 2009, and silicon on sapphire (SOS).

IQE says that the outlook for second-half 2010 remains positive, with the board expecting continued strength in sales volumes driven by increasing demand for smartphones and high-speed wireless technology, as well as for consumer optoelectronic devices. Demand-driven growth is being reinforced by an increasing trend towards outsourcing across all the market sectors in which IQE operates.

“Strong growth has returned in IQE’s key markets, with higher-than-expected sales of smartphone products in Q1/10 and accelerating growth for optoelectronic products and silicon-based epiwafers for innovative consumer technologies,” says chief executive Dr Drew Nelson. “In addition, demand for energy-efficient third-generation CPV solar products and solid-state lighting (SSL) devices continues to grow strongly,” he adds.

The group’s operationally geared model has translated strong revenue growth into even stronger growth in profits, and the board remains confident of strong demand for IQE’s products in second-half 2010, Nelson concludes.

IQE expects to report its interim results on 1 September.

See related item:

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

See: IQE Company Profile

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