Iqe Share Discussion Threads

[provonar] 05/11/2024 12:35

Taking a look at the CHIPS act funding process a bit further:



It's clear that acquiring state/local funding is a requirement before any CHIPS act (federal) funding is confirmed. Therefore, this $2M grant from Greensboro is one of the initial steps that IQE have to go through in order to secure CHIPS act funding (and is also why the local county/state is happy to put up the money - it gets more than matched by the federal level grant). That'll also be why there's the 'no commitment' statement from IQE in that I expect both grants rely on each other - IQE won't commit anything until the entire financial construction is confirmed.

What's also clear is that there needs to be significant private investment coming in to kick-start the project the CHIPS act funding is for, which is reimbursed later. So that's probably where the Taiwan IPO comes into play - raising funds to start the NC expansion that then secures CHIPS funding. There could possibly be a further funding round depending on what is needed to secure the CHIPS funding. The CHIPS grant pay-outs will be awarded when milestones are met - I doubt we'll know what those milestones are in advance (employing a certain number of new personnel; installing so many tools etc.).

The federal govt. may enter a profit-sharing deal for grants over $150M, which could affect this $305M target deal that IQE appear to be going for. Of course, you have to make profits to share any, which would be nice...

There'll be further things that IQE can do - $305M buys a lot of epitaxy tools. All the ones purchased under CHIPS funding will certainly have to be placed in the US (Greensboro) - however, older tools at the NC site could be moved to other sites (i.e. Wales) in order to spread capacity. With the relatively recent purchase of three tools from Aixtron for GaN epitaxy, the fact that these went to both sites in the US and UK mean that GaN capacity expansion could spread across both sites (with the most up-to-date and majority of the capacity being in the US).

All quite positive (for once), but definitely shouldn't count any chickens yet - which may be why the share price hasn't responded significantly so far (I'm sure this is all pretty old news to the funds - it may even explain why there was the rise earlier in the year off not a lot of news, the recent drop being possibly due to delayed plans - exacerbated now by the CEO leaving).

Now, it could become even more interesting if IQE have plans to secure the equivalent Taiwanese version of the CHIPS act funding... DYOR

[lawson27] 05/11/2024 11:43

Gaining traction off its lows, c'mon IQE, GLA

[lord loads of lolly] 05/11/2024 10:43

Indiestu - the UK government hasn’t got any spare money to pour into anything right now (other than essential, floundering services).

And you can quite easily have globalised production without a Welsh base.

[guildedge] 05/11/2024 10:37

Good luck getting any government money in the UK. The new government is yet to back the 1bn investment.



The previous CFO said uk site was in ebitda. So likely not losing money on a production basis but certainly not covering admin costs. Of course it will contribute towards the admin costs if in ebitda.

[indiestu] 05/11/2024 10:02

To say that they do not require a global production footprint would be to misunderstand the current direction and momentum of western friendly Semi production completely.

[indiestu] 05/11/2024 09:45

Lords - The Welsh facility is unlikely to be closed, it will likely be further optimised in line with the top level IQE strategy. Lets go back to last year to understand why. - The UK Gouvernant want IQE based and domiciled in the UK so they can benefit from the investment they will be pouring into the industry in future years.

[guildedge] 05/11/2024 09:38

Optimisation? Far from it. They are still geared to produce 2-3x production of what they are currently doing. If they truly wanted to slash cost they have barely touched the surface.

I assume NC is where they plan for GAN production? It sounds like it. It sound slike this could be revenue for a few years off.

Maybe IQE will do an RNS tomorrow or are they waiting on grant news as they likely don't have the monies for the new tools. Story I read said 275k grant?

It's possible the brokers have already allowed for this in their figures hence no big shift here. I suspect any RNS will only come once funds are secured.

As for that Welsh site. Why do they seem to want to expand anywhere but in Wales? Taiwan now NC instead of the Welsh site. (Getting a grant from UK government is pretty much impossible now.)

Fact remands they are still on course to lose nearly 30M over 2 years. Let's see if the brokers adjust their figures on Monday.

[lammergeier] 05/11/2024 09:37

Greensboro has proven to be a strategic location for IQE and has provided access to exceptional talent,” said Jutta Meier, Interim CEO of IQE. “We look forward to continuing our partnership with the city as we progress further with our application for Government funding via the CHIPS Act, which along with funding commitments from the State, will provide us with the capital to invest and expand our local footprint.”

[lammergeier] 05/11/2024 09:33

Simply Wall Street-American website



Trading at 63% below fair value

Revenue to grow at 12% per year


SNOWFLAKE ANALYSIS-Good value with adequate balance sheet

[longtallsally] 05/11/2024 09:27

Some persistent selling pressure.

Perhaps Americos relationship with GF was the issue…

[lord loads of lolly] 05/11/2024 09:20

indiestu - I can't help thinking the next stage in their optimisation plan might be to close the consistently underutilised Cardiff facility.

Sad though this would be - particularly for the many Welsh employees - it's hard to make the case for sticking around in a heavily underused facility in the ever higher taxed, low subsidy UK, when the US offers so much more ATM.

And I can well envisage IQE being under new GF ownership there before too long.

If the company has a very different vision from this, perhaps they should bother actually communicating with shareholders to prevent us drawing our own conclusions.

[lord loads of lolly] 05/11/2024 08:48

willoicc - I’m sure there’d be some consolidation elsewhere if this plan went ahead. Even so, it would represent a massive net expansion.

[crosswires] 05/11/2024 08:47

The company won’t respond with anything other than a formulaic response to a PI, and will only update the market via an RNS if it has a duty to.

At these levels, either the company is in dire trouble and will have to be sold (i believe above these levels considering their tools and locations) or the drop has been overblown by ii’s selling because their “programming” requires it despite the losses and PIs are terrified of buying.

[willoicc] 05/11/2024 08:43

With all this 'expansion,' are IQE just going to close down the under-utilised they already own?

[lord loads of lolly] 05/11/2024 08:42

crosswires - what doesn’t add up here is the CEO leaving with no explanation or thanks, whilst at the same time the company appears to have major US expansion plans.

Have any PIs (other than sweenoid in the past) approached the company directly, urging them to clarify via a follow up RNS? And if so, who did they contact and did they get anywhere?

[longtallsally] 05/11/2024 08:41

Wow you’re either insane, very clever or have more money than sense Crosswires!

[crosswires] 05/11/2024 08:20

Something doesn’t add up, not quite sure what it is yet BUT until we hear from IQE again I don’t think we will understand what’s going on, and it’s probably tied in with Americos departure. Frankly the sooner we get some “colour” the better as the share price will remain down at these levels until the market is informed how this relates to this years (and potentially next years) revenues.

Right now at 11p and likely 10p next the market is betting on something pretty catastrophic because it’s substantially lower than a price likely to be achieved via a takeover which is clearly a viable option as the world is scaling up for CS growth.

I must be mad but added another 100k just on the methodology that a company sale would be above these prices.

[lord loads of lolly] 05/11/2024 08:11

lpavlou - funding for such costly expansion remains puzzling at the moment. Presumably the regional grants are upfront, but they’re relatively small (though c. $5.25m isn’t to be sneezed at).

You’d imagine even IQE wouldn’t be contemplating this level of expansion unless they already had some firm demand in place.

LTS - you really have become the endless voice of doom here. Admittedly with some justification in recent times. But don’t you think IQE might just have thought about the funding issue before announcing such ambitious plans? I know Lemos came out with some totally unrealistic targets when he was in charge. But the CFO (now CEO) is presumably a bit more in touch with reality when it comes to figures. And she’s the one commenting on this project.

[longtallsally] 05/11/2024 08:07

Exactly that, IQE would have to invest way more money than they have or with the share price at 11p could ever raise…Probably why the share price has not reacted.

[lpavlou] 05/11/2024 08:00

I always expected them to get some CHIPs funding, but how are they going to pay for the investment. CHIPS act funding comes near the end of the project not the beginning. Do they have the end customers for the expanded facility?

[lord loads of lolly] 04/11/2024 23:20

LTS - finally, perhaps there ARE some reasons to be cheerful. It looks like just over $5.5m US grants HAVE been secured (other articles reporting the story linked below say they’re done deals).

It also seems we ARE now set for significant US expansion in Greensboro, albeit staggered over several years (unless it’s yet another of those Capital Markets Day yarns):

businessnc.com/iqe-plans-305-million-expansion-adding-109-jobs-in-greensboro/

A $305m staged expansion sounds highly significant, given that IQE’s entire market cap is currently well below that.

You never know, they might even make a return on their investment eventually. I’m almost glad now that I added the other day….

[longtallsally] 04/11/2024 20:35

Why would IQE dismiss him for something that happened at his prior company that wouldn’t be termed as illegal and only resulted in a fine? Doubtful.

I guess until the company actually inform the market (which they may choose not to) it will be open season for theories whilst we watch the share price fall to decade lows.

[theyak] 04/11/2024 19:59

hxxps://www.theregister.com/2024/11/04/globalfoundries_blacklist_violation/
Is this the reason for the sudden departure, maybe he was involved/responsible?

"The department specified that GlobalFoundries fessed up to 74 unauthorized shipments made without a license between February 2021 and October 2022.

The shipments had a collective value of more than $17.1 million and included nearly 5,700 wafers, the department said on Friday"

Think I'm right in that he was with GFS until 31/12/21

THEYAK

[indiestu] 04/11/2024 15:07

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