Iqe Share Discussion Threads

[fuji99] 06/6/2018 08:39

Good recovery chart. Should push towards 120p today.

[adejuk] 06/6/2018 08:21

there won't be detailed £ but expectations of headline figure and forward activity.

[sweenoid] 06/6/2018 08:13

It’s been 20th July for the last 3 years- we will get NO numbers with the IMS/trading statement, they come with results

A simple search enquiringly about the number of VCSEL chip suppliers, came up with the figure as 17, it certainly contained all the names I knew about, but I have doubts on its accuracy. However, VCSELS chips are a fairly recent innovation so 17 is certainly a ‘ball park figure’

As I said in my report IQE are certainly supplying The ‘biggies’; Luminar, Himax and Finisar ALREADY so that means we appear to be supplying 13 out of 17 VCSEL chip companies following the AGM announcement 76% and likely to raise from that imho.

Why- you might ask? Well as described eloquently by Drew Nelson OUTSOURCING is the way to go, and this also ‘feeds’ into the NDA questions.

A simplistic explanation for those who have difficulty with the concept of ‘verticality’ - many companies in the past decided it best to do the whole process themselves- wafer epitaxy, moduledesign and manufacture, it sounds sensible doesn’t it? Because you control everything, HOWEVER, you become a ‘jack of all trades’ and inherently a master of none. Volume production from big customers demands very high quality and yield- vertical companies struggle with capacity and the complexity of the design chain. Increasingly, companies concentrate on their CORE competency- chip manufacture and OUTSOURCE the wafers.

There is a large amount of hubris involved here, companies, especially when historically vertical in nature simply hate admitting they have to outsource, even if it’s for the totality of their supply, they prefer to let the market believe they do the lot- just listen to their conference calls, in essence IQE will never be mentioned and they won’t let IQE name them!

I think the days of vertical companies are done and dusted, especially now that large OEM’s are bypassing the supply chain and dealing with the IP and component manufacturers directly.

That’s my contribution for the day
S

[adejuk] 06/6/2018 08:12

hopefully the h1 numbers will provide the needed boost
july 20th last year

[fuji99] 06/6/2018 06:45

Tech Stocks lift Nasdaq.

[cotswoldsparky] 05/6/2018 22:20

mf,

Can't help you there - it may happen but I would suspect monopolies commission would get involved under the scenario you suggest. They have just announced they are working with another 10 manufacturers and I would like to see my investment grow along this route, not through takeover.

One other thing - CM used the cooking analogy when talking about competition. Anybody can buy an oven, a recipe book and ingredients. It doesn't make you a Michelin starred chef.

CS

[mad foetus] 05/6/2018 21:47

Good post Cotswold but I can't get past this basic issue. Market cap is under a billion. We are much better than all our competitors. The opportunities are mind boggling.WTF doesn't an Apple or Google or Amazon buy IQE? Imagine if they had sole use of IQEs world leading product for a few years. They would have a march on competitors worth many billions. IQE is one of my biggest holdings, I am just concerned with the gap between the buzz and the share price.

[cotswoldsparky] 05/6/2018 21:33

Excellent write ups of yesterday, as always from Dave and others. Some points to add, and my apologies if they have been mentioned already.

While IQE were clear that they could not name "you-know-who" as a customer due to NDAs, Dr Nelson did make a comment that supply chain logistics were very different now compared with in the past. Previously, IQE would supply wafers which would be processed by someone else, packed by another company and built into the design by the OEM who would not necessarily know about IQEs involvement. Nowadays, OEMs are directly involved in all stages of the supply chain.

He was able to put up a slide showing the VCSEL in the iPhone X as it was in the public domain - this one, I believe: He then showed how IQE were working on technology which could replace the optic diffractor (quite bulky) with an equivalent thin sheet of plastic - a massive size reduction.

Competitors were dissed one by one, as Dave said, as lagging on the technology curve. I went on the bus tour and Chris side-stepped my question on Apple's investment with Finisar. There was also a discussion on the bus about the LTIP which I didn't quite hear all of as I was sat about half-way back. I believe Chris said that the LTIP was applicable to all staff, just they were required to RNS the director element. IMHO, yes, there is a discrepancy between LTIP thresholds and growth forecasts but any push for higher threholds could affect staff morale, which is not great if you look on Glassdoor ( Wouldn't want Finisar / Apple taking advantage and poaching a-la IMG/APPL recently.

Re. the slide show going on the website, he said that the slides about market share were from a paid-for Morgan Stanley report which allowed for their use on a 1-2-1 basis but not for wider distribution. He needed to clarify whether they could be included.

On the first shipments from the new factory, he did say that the first small batches were likely to ship in July (he did stress that these wouldn't be significant volumes). He also said that the new factory would likely be a building site for a while (3-5 years?) as they phased in new reactors gradually to meet expected demand.

All-in-all, a company going in the right direction and I'm happy to keep a substantial chunk of my SIPP/ISA pot invested. I sincerely hope it stays an independant company for the forseeable future but realistically it will surely go the same way as other great british tech companies - the city, unfortunately, just does not understand tech stocks...would love to see a NASDAQ listing but don't think it will happen.

ATB, CS

[belt n braces] 05/6/2018 21:29

solderflux - I have never accused the board of any irregularities.

[chessmaster10] 05/6/2018 20:51

Many thanks for the report Dave, a great read and very reassuring and encouraging.

Sounds like the focus was very much on VCSELs (the number required for autonomous vehicles is quite staggering), but was there any discussion about the short to medium term outlook for infra red and solar?

Also, in the recent results statement it was stated that there would be updates as new products enter production - i guess some of these would be amongst the 10 new VCSEL customers - any indication as to when some of these new developments might be starting volume production?

[gnnmartin] 05/6/2018 19:48

An excellent report from Sweenoid as usual. Just one thing I would add.

There was a lot (as Sweenoid reported) of surprise expressed that IQE weren't installing more reactors in anticipation of demand. There are two considerations to remember. First, IIUC, IQE are preparing the building ahead of installing the reactors. The building work goes on, so installing more reactors won't be as slow as installing the first tranch. Second, the board emphasised that expanding production is a joint enterprise with the customer. The customer does not expect to come in and buy wafers of the shelf, they come to IQE to see what is possible, and that feeds into their planning. So IQE have a very good idea of likely demand.

[solderflux] 05/6/2018 19:46

B&B - As a shareholder, MF is entitled to ask these questions of the board. May I ask why you as a shorter be defending them when you have spent decent part of your life accusing them of various irregularities? I am confused....

[belt n braces] 05/6/2018 19:03

NED?

Is that the Glasgow variety, or

a non executive director?

[belt n braces] 05/6/2018 18:55

mad


'It is the job of the board to ensure shareholders are rewarded and the last 12 months haven’t been great'


one year ago 5th June 2017 share price 68.67

one year later close today share price 114.16

If the shareholders have not been rewarded over the last 12 months, exactly what type of performance was you expecting, a 10 bagger?

[mad foetus] 05/6/2018 17:08

No, I am an NED of a listed company with a bigger market cap than IQE. Once you are listed you have a duty to communicate. If you don't want that aspect of life, remain a private company. I think the share price here does not reflect the true worth of the company (as opposed to say KWS, where the company is fully valued due to the huge efforts the board make). It is the job of the board to ensure shareholders are rewarded and the last 12 months haven't been great

[zingaro] 05/6/2018 17:02

mad: you're mad mad mad. In your view, stuff the product, get the whole workforce writing publicity of one sort or another. I also hold GSK, a hundred times the market cap of IQE. Their newsflow is only about 5 times that of IQE. IQE is doing fine, they know better than you !

[mad foetus] 05/6/2018 16:28

Mind, it is annoying when BUR, FDEV, KWS and FEVR, all if I am not mistaken on AIM, all post all time highs and IQE is 40% off it's level 8 months ago. I don't accept it is all PIs trading: Milton said they sold out recently. I'd like to see director buys, more newsflow, more roadshows, with supporting info on the website.

[adejuk] 05/6/2018 16:28

we will see 100 before 180

[richardc77] 05/6/2018 15:44

Thanks to all for the AGM feedback, I am starting to get the same feeling I had when I took a decent stake at circa 20p, so I have added again today and suspect the share price in 18-24 months will give me a warm feeling.

GLTA

[jamesrowe] 05/6/2018 15:26

Thank you for the AGM updates guys and especially to Dave for taking the time to type up that detailed summary. Much appreciated by those of us who were unable to attend!

[bocase] 05/6/2018 15:23

More beneficial to the share price than a FTSE250 listing would be a Nasdaq listing where multiples are much higher. It seems that is a possibility too.

[twatcher] 05/6/2018 15:18

Dave,
Thanks for the extra info, the original wording sounded to me like merely a softening of a previous definite no, but clearly your assessment is that it is a case of when.

That would be something that would be beneficial to IQE and it's share price should it occur in 2019.

[sweenoid] 05/6/2018 15:04

“A move to a main listing would involve a re-rating, but that suggestion seems little more than a personal read of some mood music, as oppose to anything concrete that indicates it's actively being considered for 2019”

That made me laugh Ian....the mood music idea appeals to me, let me be more categorical, after discussing the issue with the chairman who has been historically antagonistic to a move to the FTSE, his objections are no longer in place, that is obviously a ‘board’ opinion otherwise he would not have voiced it!
With my ‘clouded and alcohol addled brain not being able to remember his exact words, it sounded entirely like and this is my interpretation - IQE were actively thinking about a FTSE move this year if Philip Rasmussen had not tragically died.The CFO being THE central figure in such a move, would therefore mean that any such plans would have to be shelved until Phil’s replacement is appointed and settled in.

Since I have asked this question in EVERY AGM for 5 years, I paid particular attention to the response as it was entirely different to years gone past.
I now take it as a racing certainty that IQE will be leaving AIM, that’s MY interpretation, when I can’t say and neither can IQE until the new CFO is in place. Any such decision would surely be pivotal to his/ her appointment negotiations, a CFO post in a likely potential FTSE 250Company would surely be more attractive for ambitious prospective applicants than a similar position in an AIM stock? although I believe IQE’s potential is such, that we will get the right person regardless

Sometimes it’s just best TO BE THERE ;-)

That’s me done for the day

Edit....get ready for all the inheritance tax moans ;-) and of course, trading in shares rather than CFD’s will become more expensive due to stamp duty costs , there are ALWAYS +’s and -‘s to every scenario...eh.

S

[toffeeman] 05/6/2018 14:56

Q: How many VCSEL chipmakers are there?