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28 March 2007


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

Epiwafer and substrate foundry IQE of Cardiff, Wales, UK, which late last year acquired Emcore’s Electronic Materials Division (now IQE RF LLC) and MBE Technology, has announced its preliminary results for the year ended 31 December 2006.

Revenues grew by 55.2% year-on-year to £32.4m, compared with revenues of £20.9m in 2005, and include IQE RF LLC sales of £5.5m (2005: £nil).

Gross profit was £2.5m, a £3.3m increase on 2005’s gross loss of £0.8m before an exceptional gain of £1.7m. The company says the improvement is due to increased revenues and improved efficiencies, together with a gross margin of £1.2m (2005: £nil) generated by IQE RF LLC.

But despite the increase in revenues, along with a 67.8% increase in wafer volumes to 250,000 units in 2006, IQE posted an operating loss of £4.2m, although this was down 30.2% on the £6.1m loss in 2005.

Drew Nelson, IQE’s chief executive, said: “Following the acquisitions, wireless communications products now account for over 75% of our revenues and the Group is now the largest independent wafer supplier to the global wireless market.

“The mobile handset market continues to be the primary consumer of IQE’s products with the handset upgrades being the fastest growing part of the sector.  These tend to be higher speed, feature-rich, high-end products that use more GaAs materials for the added performance and functionality,” said Nelson.

Optoelectronic materials accounted for approximately 20% of IQE’s revenues, and the company says that increasing demand for high-efficiency solar cells provides a great opportunity for these materials over the coming years. IQE is currently developing high efficiency terrestrial solar cell materials, and expects pilot production to begin by the end of 2007.

IQE’s silicon-based epitaxial services accounted for approximately 5% of 2006 revenues.  The company has won several outsourcing contracts to provide its core products and epi-wafer services, and says it has established a strong position in strained silicon, which it is further developing as a strained silicon on insulator product (sSOI).

“During the year we achieved a significant increase in revenues, bringing the Group closer to achieving sustainable profitability in 2007. We believe the continuing growth in the end markets for our products, coupled with our strategic positioning in the wireless sector, place the Group in a good position to continue to grow strongly,” Nelson concluded.

*IQE secures development contracts

In other news, IQE has secured two 12-month contracts, worth in aggregate over $2.4m during 2007, to develop materials for use in next generation, ultra high speed integrated circuits. 

One contract relates to the development of Strontium Titanium Oxide on Silicon epi-wafers (STO/Si), using IQE’s MBE systems, while the other contract is to develop advanced material structures for increased processing speed for future integrated circuits. 

Nelson said: “We plan to aggressively pursue the metal-oxide on Silicon market where we offer unique and superior solutions for these advanced state of the art materials systems.  Our entry into this market is important as it further diversifies the Group’s product portfolio and underscores our position as the global leader in advanced semiconductor wafer production and R&D.”

See related items:

IQE acquires Singapore epiwafer foundry MBE Technology for £7.5m 

IQE closes acquisition of EMD after raising £12m

IQE confirms 50% revenue rise

North America handset shipments should reach 163m in 2007, with Motorola continuing to dominate

Handset shipments reached forecast of 1 billion units in 2006, says Strategy Analytics