IQE PLC H1 2018 Post-close Trading Update And Notice Of Results

 
TIDMIQE 
 
 
 
 
   IQE plc 
 
   H1 2018 Post-close Trading Update and notice of results 
 
   Very significant expansion of VCSEL engagements and successful 
replenishment of wireless inventory 
 
   Cardiff, UK. 24(th)  July 2018: IQE plc (AIM: IQE; "IQE", the "Company" 
or the "Group"), the leading global supplier of advanced wafer products 
and wafer services to the semiconductor industry, provides a trading 
statement for the six months ended 30 June 2018. 
 
   The Group announces that it expects to deliver revenues of approximately 
GBP73m for the first half of 2018 (H1 2017: GBP70m), which was achieved 
against a currency headwind of 9.5%, reflecting strong double-digit 
sales growth on a constant currency basis in each of its three primary 
markets. 
 
   The Wireless segment has shown strong growth of nearly 11% on a constant 
currency basis, when comparing it with H1 2017, as the Group delivered 
on its intention to replenish wireless inventory channels following the 
capacity allocation made to VCSEL production in H2 2017. The Wireless 
segment remains in a strong position and as described in the additional 
announcement made today, has been underpinned by the renewal of the 
supply agreement with our largest customer. This contract has been 
extended for a further 15 months' supply in addition to expanding to 
cover a wider range of products and increased share of the customer's 
epiwafer requirements to IQE. As a consequence of this extended 
agreement, together with additional qualifications recently completed 
with other Wireless customers, the Board has approved a Wireless 
expansion programme for our plant in Hsinchu, Taiwan with the aim of 
increasing Wireless capacity there by more than 40% in 2019. This will 
have two benefits; (i) delivering further production efficiencies and 
capacity improvements in the US for Photonics materials, and (ii) 
eliminating cost inefficiencies incurred in converting and re-converting 
reactors between the two materials systems. 
 
   The Photonics segment is expected to deliver significant growth of 30% 
on a constant currency basis for the first six months of the year, when 
compared with H1 2017.  Revenue from our largest Photonics customer was 
broadly flat when compared with H1 2017, as the supply chain absorbed 
inventory following a very successful and steep production ramp up for 
VCSELs relating to a 3D sensing application in H2 2017. Excluding 
revenue from this customer, underlying Photonics revenues are up 
approximately 40% on a constant currency basis when compared with H1 
2017. This is a clear demonstration of the traction the Company is 
experiencing across a number of VCSEL chip manufacturers, who took 
advantage of capacity availability to embark on a significant number of 
production qualifications, in addition to growth in other parts of our 
Photonics business. 
 
   The Infrared segment also delivered  growth of approximately 11% on a 
constant currency basis, when compared with H1 2017 and is expected to 
show further strong growth in H2. 
 
   The capacity expansion at our new Newport, South Wales, UK, facility is 
proceeding according to plan. The first five reactors, which will be 
qualified for Photonics, are now installed and are at various stages of 
acceptance testing, commissioning and qualification. Initial results on 
quality and reactor performance remains very encouraging. A further five 
reactors will be delivered in H2, with acceptance testing, commissioning 
and qualification expected to commence immediately after delivery. Phase 
one of the build out at the Newport facility will provide 20 fully 
serviced reactor bays, which are expected to be fully operational during 
H1 2019.  Further reactors are planned to be installed through the 
remainder of 2019. 
 
   The Group continues to trade in line with current market expectations; 
the previous guidance provided in the June AGM statement for a 40:60 
H1:H2 2018 revenue split remaining unchanged, accompanied by a shift 
back from Wireless to Photonics, which has already commenced during June 
2018. 
 
   Notice of Results 
 
   The Group now expects to report its half-year results for 2018 on 29(th) 
August 2018, having decided to bring forward this date from the 
previously announced 5(th) September, due to a number of conflicting 
events. 
 
   Dr Drew Nelson, Chief Executive of IQE, said: 
 
   "Our highly successful H2 2017 ramp of 6 inch VCSEL production for a 
major customer has established IQE as the go-to materials solution 
provider for this technology.  It is widely recognised that with more 
than 25 years' experience of working with VCSELs and a clear, visible, 
commitment to world leading manufacturing capacity on two continents, we 
are and will remain the premier preferred manufacturer of these 
materials. H1 2018 has seen a very significant increase in the number 
and extent of our engagements with VCSEL chip customers.  We are now 
engaged with over 20 VCSEL chip manufacturers in Asia, North America and 
Europe on qualifications for mobile, sensing, automotive and datacom 
applications.  We  are already fully qualified and in mass production 
with six of these companies and in final qualification stages with an 
additional six more. Furthermore, as detailed in our announcement of 9 
July 2018, we reached a production milestone for our NIL technology 
which demonstrates our ability to bring to market some of the leading 
materials solutions that we have been showcasing and sampling to our 
customers. We have significant engagements for our other core 
technologies, including GaN on Silicon, cREO and QPC, and these are 
proceeding as planned. The H2 2018 ramp for Photonics has already 
started and we look forward to the rest of 2018 and in particular the 
further ramp up which is expected in 2019, with considerable 
anticipation." 
 
   The information contained within this announcement is deemed to 
constitute inside information as stipulated under the Market Abuse 
Regulations (EU) No. 596/2014. Upon the publication of this announcement, 
this inside information is now considered to be in the public domain. 
 
   GLOSSARY OF TERMS 
 
   VCSEL............... Vertical Cavity Surface Emitting Laser 
 
   GaN.................... Gallium Nitride 
 
   RF...................... Radio Frequency 
 
   DFB.................... Distributed Feedback Laser 
 
   cREO(TM)............. Crystalline Rare Earth Oxide 
 
   CONTACTS 
 
   IQE plc [phone] 
 
   Godfrey Ainsworth 
 
   Drew Nelson 
 
   Chris Meadows 
 
   Canaccord Genuity + 44 (0) 20 7523 8000 
 
   Simon Bridges 
 
   Richard Andrews 
 
   Peel Hunt [phone] 
 
   Edward Knight 
 
   Nick Prowting 
 
   ABOUT IQE 
 
   http://iqep.com 
 
 
 
 
 
   IQE is the leading global supplier of advanced semiconductor wafers that 
enable a diverse range of applications, supported by an innovative 
outsourced foundry services portfolio that allows the Group to provide a 
'one stop shop' for the wafer needs of the world's leading semiconductor 
manufacturers. 
 
 
 
 
 
   IQE uses advanced crystal growth technology (epitaxy) to manufacture and 
supply bespoke semiconductor wafers 'epi-wafers' to the major chip 
manufacturing companies, who then use these wafers to make the chips 
which form the key components of virtually all high technology systems. 
IQE is unique in being able to supply wafers using all of the leading 
crystal growth technology platforms. 
 
 
 
 
 
   IQE's products are found in many leading-edge consumer, communication, 
computing and industrial applications, including a complete range of 
wafer products for the wireless industry, such as smartphones and 
wireless infrastructure, Wi-Fi, base stations, and satellite 
communications; optical communications, optical storage, printing, 
thermal imagers, leading-edge medical technologies, automotive and 
aerospace technologies, a variety of advanced silicon based systems and 
high efficiency concentrator photovoltaic (CPV) solar cells. 
 
 
 
 
 
   IQE operates multiple manufacturing and R&D facilities worldwide. 
 
 
 
 
 
 
 
 

(END) Dow Jones Newswires

July 24, 2018 02:00 ET (06:00 GMT)

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