IQE PLC Trading Update

 
TIDMIQE 
 
 
   IQE plc 
 
   ("IQE", the "Company" or the "Group") 
 
   Trading Update 
 
   Cardiff, UK 18 November 2019: IQE plc (AIM: IQE) the leading supplier of 
advanced wafer products and material solutions to the semiconductor 
industry, announces the following trading update for the full year ended 
31 December 2019. 
 
   IQE now expects to deliver revenue of between GBP136m and GBP142m, 
compared to the previous guidance range of GBP140m to GBP160m, including 
a forex tailwind of circa GBP3m. 
 
   A mid-single digit adjusted operating loss is now expected resulting 
from revenues being slightly below the previous guidance range, 
additional one-off commissioning costs at the new foundry in Newport, 
general diseconomies of scale associated with operating at low volume in 
some sites and the inclusion of losses for the Singapore CSDC entity as 
announced in October. 
 
   In Photonics, consistently strong 3D sensing volumes with the Company's 
largest Vertical Cavity Surface Emitting Laser (VCSEL) customer have 
been achieved in H2 2019, underlining IQE's lead position for epi-wafers 
in this supply chain. The Company continues to make good progress on a 
significant number of Android-related supply chains including two 
recently announced production qualifications. The market for Indium 
Phosphide lasers for datacom / telecom has remained weak but with signs 
of growth for 2020, particularly in Asian markets. 
 
   In Wireless, there have been continued low volumes of orders and 
reductions in inventory by our major RF chip customers in the US, offset 
to a limited extent by a promising increase in production for Asian 
supply chains. IQE has qualified 3 tools, with 2 further tools in the 
process of qualifying, with a major Taiwanese foundry. The Company 
continues to make good progress on new product development in the areas 
of RF Filters and Switches for 5G. 
 
   Since June, the Company has taken steps to reduce costs and capital 
expenditure as the infrastructure phase of capacity expansion has been 
completed. Capex will be towards the bottom end of the previous guidance 
of GBP30-40m and the net debt position at year end is expected to be 
between GBP15m to GBP20m, against increased debt facilities of GBP57m 
announced in June. 
 
   The outlook for 2020 includes a seasonally weak Q1 and continued supply 
chain transitions in the wireless market. Beyond Q1 2020, IQE is 
cautiously optimistic about a return to growth, driven by expected 
content gains in an expanding market for 3D sensing, demand for GaN to 
meet accelerating 5G infrastructure deployments and expanding Asian 
market opportunities for both Photonics and Wireless products as supply 
chains continue to localise. Taking all of the above into account, the 
Company expects total revenue will return to moderate growth in 2020. 
 
   Dr Drew Nelson, Chief Executive Officer of IQE, said: 
 
   "IQE has experienced very challenging market conditions in 2019. 
Shortfalls in revenue relate predominantly to two major customers, with 
whom IQE is confident it has not lost share and who remain very well 
positioned for returns to growth in 2020. Indeed, the Company remains 
well positioned to capitalise on an expanding future compound 
semiconductor market opportunity driven by the macro trends of 5G and 
connected devices. In order to fully realise this opportunity, the 
recently announced Executive Management Board is already making good 
progress in driving the Company's approach to increasing profitability, 
with specific responsibilities assigned for programs on operational 
execution, new technology introduction, revenue expansion through 
customer proximity and diversification, and strong cost management." 
 
   IQE will be holding a conference call for Analysts and Institutional 
Investors at 08:00 London time today. 
 
   CONTACTS 
 
   IQE plc 
 
   [phone] 
 
   Drew Nelson 
 
   Tim Pullen 
 
 
 
   Peel Hunt LLP (Nomad and Joint Broker) 
 
   [phone] 
 
   Edward Knight 
 
   Nick Prowting 
 
   Christopher Golden 
 
 
 
   Citigroup Global Markets Limited (Joint Broker) 
 
   [phone] 
 
   Christopher Wren 
 
   Peter Catterall 
 
   Headland Consultancy (Financial PR) 
 
   + 44 (0) 20 38054822 
 
   Andy Rivett-Carnac: [phone] 
 
   Tom James: [phone] 
 
   This announcement contains inside information for the purposes of 
Article 7 of Regulation (EU) No 596/2014 ("MAR"). Upon the publication 
of this announcement, this inside information is now considered to be in 
the public domain. 
 
   For the purposes of MAR and Article 2 of Commission Implementing 
Regulation (EU) 2016/1055, this announcement is being made on behalf of 
IQE by Tim Pullen, Chief Financial Officer. 
 
   ABOUT IQE 
 
   http://iqep.com 
 
   IQE is the leading global supplier of advanced compound semiconductor 
wafers that enable a diverse range of applications across: 
 
 
   -- handset devices 
 
   -- global telecoms infrastructure 
 
   -- connected devices 
 
   -- 3D sensing 
 
 
   The macro trends of 5G and connected devices are expected to drive 
significant growth for compound semiconductors over the coming years. 
 
   As a scaled global epitaxy wafer manufacturer, IQE is uniquely 
positioned in this market which has high barriers to entry. IQE supplies 
the whole market and is agnostic to the winners and losers at chip and 
OEM level. By leveraging the Group's intellectual property portfolio 
including know-how and patents, it produces epitaxy wafers of superior 
quality, yield and unit economics. 
 
   IQE is headquartered in Cardiff UK, and is listed on the AIM stock 
Exchange in London. 
 
 
 
 

(END) Dow Jones Newswires

November 18, 2019 02:00 ET (07:00 GMT)

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