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23 July 2007


Filtronic forecasts return to profit this year, pending sale of Compound Semiconductors division

For its fiscal 2007 (to end May), Filtronic plc of Shipley, UK has reported preliminary revenue from continuing operations of £73.5m (up 17% from fiscal 2006’s £63.0m).

For the Compound Semiconductors division (which has a 6” GaAs RFIC foundry in Newton Aycliffe, County Durham), revenues rose 46% (from £20.8m to £30.3m), helped by an increase in the number of customers. However, its operating losses increased from £5.1m to £29m.

Nevertheless, for the Point-to-Point business (which makes customized electronic subassemblies for backhauling cellular networks) revenues rose 93% to £22.4m. Also, the UK Defence business showed a good recovery in the second half of the fiscal year.

Consequently, Filtronic’s overall operating loss before exceptional items has been halved, from £10.9m to £5.3m (although, after exceptional items, this rose from £10.2m to £27.6m). 

Disposals realised £159m: £144.5m for the Wireless Infrastructure business (sold to Powerwave Technologies Inc), plus £2.8m for properties and a deferred consideration of £11.3m from the earlier sale of the Handset division (bringing the total to £55.5m). So, year-end cash reserves were £118.3m (compared to net debt of £12.7m at the end of fiscal 2006). Also, disposal of the US Defence business is at an advanced stage.

The Compound Semiconductors division remained a drag on company profitability in fiscal 2007, says chairman John Poulter. Cost cutting (such as abandoning its £45m expansion plan last December, restricting capital expenditure to £13.4m ) moved the division near to break even in the second half of the year. Nevertheless, at least 115 job losses are expected, due partly to its main customer, RF Micro Devices of Greensboro, NC, USA, bringing production of GaAs pHEMT-based switches for cell-phone handsets in-house from September.

Filtronic says that its board is “committed to defining the future of its Compound Semiconductors division” and is still engaged in discussions to sell the business once its problems have been resolved.

Once this has been achieved, progress of the UK Defence and (in particular) the Point-to-Point businesses, as well as reduced central costs, indicate that Filtronic should return to profit during this fiscal year, the firm concludes.

See related items:

Filtronic to cut 115 jobs as RFMD decides to cease buying GaAs pHEMT switches in September

Filtronic confirms cut in compound semi capex due to lower-than-expected demand

Filtronic shaves around £5m off expansion plan