IQE PLC Trading Update And Comment On Vcsel Supply Chain
November 13 2018 - 2:00AM
UK Regulatory
TIDMIQE
IQE plc
Cardiff, UK. 13(th) November 2018: IQE plc (AIM: IQE; "IQE", the
"Company" or the "Group"), the leading global supplier of advanced wafer
products and materials solutions to the semiconductor industry, provides
the following trading update further to the announcement made by IQE on
12(th) November 2018.
IQE confirms it was notified on 12(th) November 2018, following an
announcement made by a major chip company in the VCSEL supply chain on
the same day, that the chip company had received notice from one of
their largest customers for 3D sensing laser diodes that they would
materially reduce shipments for the current quarter.
As a consequence of the change in market conditions, IQE announces that
it now expects to deliver revenues of approximately GBP160m for FY 2018
(H1 2018 GBP73.4m, FY 2017 GBP154.6m).
Photonics demand was facing a later but steeper Photonics ramp for
VCSELs for consumer products moving into Q4 2018, a reflection of the 6
inch VCSEL inventory overbuild in FY 2017 being larger and taking longer
than expected to be consumed during FY 2018. With the impact of this
recent announcement coming at this critical time, Photonics wafer
revenues growth for FY 2018, on a constant currency basis, is now
expected to be approximately 11% (previous guidance for FY 2018
Photonics wafer revenue: 35% to 50%) and based on early initial
indications, is currently expected to return to previously guided levels
of 40% to 60% revenue growth in FY 2019.
Wireless wafer revenues for FY 2018, on a constant currency basis, is
expected to grow at 8%, above the top end of the 0% to 5% revenue growth
guidance, given in the Company's H1 trading statement. Wireless demand,
especially for GaN products, has been strong and capacity was retained
through Q3 2018, to continue to address demand following the
replenishment of inventory channels depleted during H2 2017. The late
ramp of Photonics production also provided an extended opportunity for
additional engagement and qualification programs with more than 25 VCSEL
chip manufacturers.
Infrared wafer revenues, on a constant currency basis, is also expected
to grow at or exceed the top end of current CAGR guidance range of 5% to
15% for FY 2018 and remain in the 5% to 15% range for FY 2019.
As a result, FY 2018 Adjusted EBITDA is now expected to be approximately
GBP31m (FY 2017 GBP37.1m).
Dr Drew Nelson, Chief Executive of IQE, said:
"The much reported VCSEL inventory overbuild following the successful H2
2017 ramp for a new 3D sensing consumer product application for this
technology, took longer to work through the inventory channels than the
industry expected. It is now clear that some of this inventory likely
satisfied product build as late as September and October 2018. This
resulted in a steeper and later ramp for VCSEL production in Q4 2018.
The impact of an immediate slowdown in shipments of VCSEL wafers will
therefore materially impact our expected year end revenues and
profitability.
Nonetheless, Photonics revenues, on a constant currency basis, from FY
2016 through to FY 2018 is still expected to deliver revenue growth of
at least 45%, which is within the guidance range we retain for FY 2019.
We believe that we have retained approximately 90% share of the VCSEL
epi-wafer market that we enjoyed last year and based on early initial
indications, we expect a similar market share in FY 2019, but with a
significantly broader OEM end customer spread as the technology
penetrates many more devices and applications.
IQE is the premier solution provider for this VCSEL technology serving
the mobile, sensing and datacom applications. We have demonstrated the
three key elements for establishing a pre-eminent position for this
high-growth material; technical competence, 6 inch production capability
through an aggressive ramp and finally a commitment to install and
qualify significant capacity to meet industry assumptions for future
VCSEL demand. Our technical leadership is underwritten by more than 25
years' experience with these highly complex structures and this will be
maintained by an unrivalled technology roadmap ensuring we continue to
excel. The added capacity to be provided by our Newport Foundry is
progressing, with 10 reactors now installed and 4 of which are already
engaged in multiple customer qualification activity with some initial
volume mass production possible at the very end of the current quarter.
The throughput, yield and quality (uniformity) of the qualifications
currently underway are very encouraging.
Our Photonics business is building a wide customer base across multiple
chip manufacturers providing VCSELs for a number of different end market
applications including 3D sensing and this increasing customer
diversification will in time produce a better-balanced and more
uniformly distributed demand profile. I am also delighted by the strong
performance of both our Wireless and Infrared business units and the
opportunities they face for 2019 and beyond.
We reiterate our long-term guidance for each of the photonics, wireless
and infrared businesses."
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
CAGR.......................Compound Annual Growth Rate
Adjusted EBITDA.......EBITDA after adjusting for the impact of one-off,
non-cash and non-operational items
CONTACTS:
IQE plc
Godfrey Ainsworth
Drew Nelson
Chris Meadows +44 (0) 29 2083 9400
Canaccord Genuity (Nomad and Joint Broker)
Simon Bridges
Richard Andrews + 44 (0) 20 7523 8000
Peel Hunt (Joint Broker)
Edward Knight
Nick Prowting +44 (0) 20 7418 8900
ABOUT IQE
https://www.globenewswire.com/Tracker?data=yZf7NKp1JKLALUCxlBuC8wkLnLAqoe5-kjjIlkMIDci9q9W0x_02bwZV-eorSbpLXZxy4zi3xHh-O4FM8nWjeg==
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
November 13, 2018 02:00 ET (07:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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