NeoPhotonics Provides Business Update Following Recent U.S. Department of Commerce Tightening of Restrictions on Huawei
August 31 2020 - 4:07PM
Business Wire
- Reaffirms third quarter 2020 outlook
- Highlights broad growth from customers beyond
Huawei
- Targeting a return to profitability by the end of 2021,
excluding Huawei
NeoPhotonics Corporation (NYSE: NPTN), a leading developer of
silicon photonics and advanced hybrid photonic integrated
circuit-based lasers, modules and subsystems for
bandwidth-intensive, high speed communications networks, today
provided a business update following the U.S. Department of
Commerce’s Bureau of Industry and Security (BIS) updated actions on
August 17, 2020.
Recent actions by the BIS in the Department of Commerce
(Commerce) have increased restrictions on Huawei and its affiliates
on the Entity List related to items produced domestically and
abroad that use U.S. technology or software and have imposed new
license requirements for items subject to Commerce export control.
NeoPhotonics has closely evaluated these restrictions and currently
targets achieving its third quarter outlook provided on August 4,
2020, with shipments to Huawei contributing approximately $40
million of revenue in the quarter. Beyond the third quarter, the
Company is still assessing the full impact of the current BIS
restrictions. Given the uncertainty, the Company will manage the
business without relying on revenue contributions from Huawei.
“Despite the near-term revenue impact resulting from the recent
BIS restrictions, demand for our products broadly remains strong,
driven by expanding high speed capacities, hyper-scale data center
interconnects, network edge provisioning for increased cloud
service usage and remote working,” said Tim Jenks, Chairman and CEO
of NeoPhotonics. “We remain excited about the growth prospects
ahead of us. In particular, our highest speed over distance
products for 400G and above applications continue to gain traction
with leading network equipment manufacturers and are expected to
represent more than 20% of total revenue in 2020, after only two
years in the market. Of note, revenue from customers beyond Huawei
is expected to grow 40-50% over the next year independent of
potential customer share shifts. Coupled with the upcoming 400ZR
and 400ZR+ high speed module opportunity which is expected to begin
volume production in 2H 2021, the end market for these products, as
defined by high speed ports, is forecasted to increase at an 80%
five-year compounded annual growth rate through 2024,” continued
Mr. Jenks.
“Beyond topline growth, we must also ensure our operations
remain aligned with the demand outlook and pursue appropriate
expense adjustments and structural actions to mitigate the impact
of revenue declines. We are fortunate to have entered this period
with both a strong financial position and a management team with a
demonstrated track record of taking the necessary actions to
navigate uncertain times. Through the continued growth of our
existing product lines and the ability to pull operational levers
as needed, we feel confident in our ability to return to
profitability by the end of 2021 with a greater level of diversity
across our customer base,” concluded Mr. Jenks.
Conference Call
The Company will host a conference call today, Monday, August
31, 2020 at 5:00 PM Eastern Time (2:00 PM Pacific Time). The call
will be available, live, to interested parties by dialing
800-437-2398. For international callers, please dial 323-289-6576.
The Conference ID number is 1963745. Please dial into the
conference call 5-10 minutes prior to the scheduled start time.
A live webcast will be available in the Investor Relations
section of NeoPhotonics’ website at:
http://ir.neophotonics.com/phoenix.zhtml?c=236218&p=irol-calendar.
A replay of the webcast will be available in the Investor
Relations section of the Company’s website approximately two hours
after the conclusion of the call and remain available for
approximately 30 calendar days.
About NeoPhotonics
NeoPhotonics is a leading developer and manufacturer of lasers
and optoelectronic solutions that transmit, receive and switch
high-speed digital optical signals for Cloud and hyper-scale data
center internet content provider and telecom networks. The
Company’s products enable cost-effective, high-speed over distance
data transmission and efficient allocation of bandwidth in optical
networks. NeoPhotonics maintains headquarters in San Jose,
California and ISO 9001:2015 certified engineering and
manufacturing facilities in Silicon Valley (USA), Japan and China.
For additional information visit www.neophotonics.com.
Legal Notice Regarding Forward-Looking Statements
This press release includes statements that qualify as
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements about the following topics: future financial results,
demand for the Company’s high-speed products, and the Company’s
market position. Forward-looking statements are subject to certain
risks and uncertainties that could cause the actual results to
differ materially. Those risks and uncertainties include, but are
not limited to, such factors as the Company’s reliance on a small
number of customers for a substantial portion of its revenues;
market growth in key countries; potential impacts of the Covid-19
pandemic; reduction in or volatility of customer orders or delays
in shipments of products to customers; governmental trade actions;
possible disruptions in the supply chain or in demand for the
Company’s products due to industry developments; the ability of the
Company's vendors and subcontractors to supply or manufacture the
Company's products in a timely manner; ability of the Company to
meet customer demand; volatility in utilization of manufacturing
operations and manufacturing costs; reductions in the Company’s
rate of new design wins, and/or the rate at which design wins go
into production, and the rate of customer acceptance of new product
introductions; potential pricing pressure that may arise from
changing supply or demand conditions in the industry; changes in
demand for the Company's products including impact of excess
industry capacities following the tighter restrictions on Huawei;
the impact of competitive products and pricing and alternative
technological advances; the accuracy of estimates used to prepare
the Company's financial statements and forecasts; the timely and
successful development and market acceptance of new products and
upgrades to existing products; the difficulty of predicting future
cash needs; changes in economic and industry projections; and a
decline in general conditions in the telecommunications equipment
industry or the world economy generally. For further discussion of
these risks and uncertainties, please refer to the documents the
Company files with the SEC from time to time, including the
Company's Annual Report on Form 10-K/A for the year ended December
31, 2019 and its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2020. All forward-looking statements are made as of
the date of this press release, and the Company disclaims any duty
to update such statements.
©2020 NeoPhotonics Corporation. All rights reserved.
NeoPhotonics and the red dot logo are trademarks of NeoPhotonics
Corporation. All other marks are the property of their respective
owners.
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version on businesswire.com: https://www.businesswire.com/news/home/20200831005696/en/
Investor Contacts
NeoPhotonics Corporation Beth Eby, Chief Financial Officer
+1-408-895-6086 ir@neophotonics.com
Sapphire Investor Relations, LLC Erica Mannion, Investor
Relations +1-617-542-6180 ir@neophotonics.com
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