AGM Statement
20 years and still innovating
IQE plc (AIM: IQE, "IQE" or the "Group"), the leading global supplier
of advanced semiconductor wafer products and wafer services to the
semiconductor industry, held its annual general meeting at 10am
today, at which all resolutions were duly passed. The Chairman of
IQE, Dr Godfrey Ainsworth made the following statement:
"I am pleased to report that IQE is making strong progress. As we
stated in our half year trading update last Thursday, the strong
first quarter growth reported in March has continued throughout the
second quarter. The Board anticipates that the Group's performance
will be ahead of market expectations, with first half revenues of
around £30 million and EBITDA (before exceptional items) of at least
£3.3 million.
"The rapidly growing demand for our products is being fuelled in part
by a number of significant factors in the wireless communications
marketplace. Firstly, the advanced features, higher performance and
low power consumptions that are enabled by the use of gallium
arsenide mean that the volume of our products being used in handsets
and other wireless devices is growing substantially faster than the
overall handset market.
"Secondly, the growth in wireless communications in emerging markets
is driving additional demand for feature rich handsets with advanced
features and efficiencies made possible by our products. Thirdly,
competing technologies and protocols are being consolidated within
hardware by building multiple components in handsets to enable
greater compatibility between new and emerging wireless standards.
"This week marks the 20th anniversary of the creation and launch of
IQE - this is a tremendous achievement.
"At the time IQE came into being in 1988, many of today's high-tech
products behind which the company provides the enabling materials,
were either emerging technologies or had not yet been imagined. The
world-wide-web was in its infancy and communications were dominated
by voice traffic rather than data but the anticipated growth in
communications during the '90s drove the advancement of a range of
fibre optic technologies.
"CDs were taking over from vinyl discs for recorded music but the
technology for the same to happen with video in the form of Digital
Versatile Discs (DVD) was still several years away.
"Mobile phones were becoming available but were not the elegant
devices with which we are now so familiar. During the late '80s and
early '90s, the functionality and efficiency of mobile telephony made
it difficult for some commentators to see a future for mobile
communications for ordinary voice calls let alone for data, music,
photography, video and entertainment.
"Video on demand through cable or satellite was evolving but was
limited by the technologies available at the time and satellite
navigation was limited to the realms of science fiction.
"IQE has played an important role in providing the enabling
technology behind many of the technologies that we today take for
granted. Many of today's high technology products have been
developed and produced by major blue-chip, multinational companies
using IQE's wafers and during the last twenty years IQE has been a
key driver in promoting and providing a highly cost effective
outsourcing business model for the specialist provision of advanced
semiconductor materials, as an alternative to in house manufacture.
This has been an outstanding success and many early customers have
now switched totally to the wafer outsource model. "During the '90s,
the rapid expansion of the fibre optic market was a key driver for
the Group. IQE embarked on an ambitious expansion programme to keep
up with demand and this was financed through funds raised from its
IPO in May '99. Strong demand continued through to 2001 when the
"dot-com" bubble burst and it became apparent that there were
considerable excess inventories throughout the supply chain.
"Since the technology crash in 2001 IQE has deliberately and
successfully diversified its product range and has limited its
exposure to single technology nodes by focussing on a wide range of
high growth potential markets. Over the last few years the Company
has grown both organically and through selected acquisitions to
become the leading player in advanced semiconductor materials. During
the same period, the industry has matured and is increasingly
embracing the "Asset-Lite" outsource business model that IQE has
always promoted.
"IQE's primary product range focuses on RF components that are used
in mobile communications devices and wireless applications, but its
core technology also enables a range of other products that include
lasers for CD/DVD players and recorders, printers, copiers and
emerging laser projection devices. And demand for fibre-optic
products which were part of our original core competency is now also
returning.
"IQE continues to be innovative and is working with its customers on
exciting emerging technologies including low power, ultra high
brightness light sources and high efficiency solar cells. Concerns
over climate change and oil costs rising to more than $140 barrel
provide renewed urgency in bringing these new technologies in to
volume production. Over the next five years it is expected they will
provide market opportunities for IQE which could dwarf our existing
wireless business.
"IQE's 20 years of experience as a global leader in advanced
semiconductor materials uniquely places the Group as the partner of
choice in providing the core enabling technologies behind a wide
range of future generation products.
"The advanced semiconductor materials in which IQE specialises are an
essential component in ultra-high brightness light emitting diodes
(UHB-LEDs), which are rapidly replacing incandescent lighting in many
areas from automotive applications through to industrial, commercial
and residential lighting.
"Our advanced materials also form the very core of
concentrator-photovoltaic (C-PV) solar cells which offer the highest
efficiencies for converting solar energy into electricity. The
optoelectronic properties that our materials offer are already being
developed for use in next generation technologies such as image
sensing, video projection, games consoles and a host of other
applications that will transform our world over the coming
years.
"Many of the Group's senior management team have provided the company
with leadership during the last twenty years including one of the
co-founders, Drew Nelson. We continue to expand the company by
bringing on line additional capacity at several locations to meet the
continuing, increasing demand.
"Although no one knows what the digital age will bring over the next
20 years, the Board is confident that the continuing buoyant market
conditions and our robust strategy will ensure that we remain on
course to deliver strong growth in revenues and profits in the
current financial year."
Contacts:
IQE plc (+44 29 2083 9400)
Drew Nelson
Phil Rasmussen
Chris Meadows
College Hill (+44 20 7457 2020)
Adrian Duffield
Kate Norton
Noble & Company Limited (+ 44 20 7763 2200)
John Llewellyn-Lloyd
Sam Reynolds
Panmure Gordon (UK) Limited (+44 20 7459 3600)
Aubrey Powell
Ashton Clanfield
NOTE TO EDITORS
IQE is the leading global supplier of advanced semiconductor wafers
with products that cover 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
mobile handsets and wireless infrastructure, Wi-Fi, WiMAX, base
stations, GPS, and satellite communications; optical communications,
optical storage (CD, DVD), laser optical mouse, laser printers &
photocopiers, thermal imagers, leading-edge medical products,
barcode, high efficiency LEDs and a variety of advanced silicon based
systems.
The manufacturers of these chips are increasingly seeking to
outsource wafer production to specialist foundries such as IQE in
order to reduce overall wafer costs and accelerate time to market.
IQE also provides bespoke R&D services to deliver customised
materials for specific applications and offers specialist technical
staff to manufacture to specification either at its own facilities or
on the customer's own sites. The Group is also able to leverage its
global purchasing volumes to reduce the cost of raw materials. In
this way IQE's outsourced services, provide compelling benefits in
terms of flexibility and predictability of cost, thereby
significantly reducing operating risk.
IQE operates six manufacturing facilities located in Cardiff (two)
and Milton Keynes in the UK; in Bethlehem, Pennsylvania and Somerset,
New Jersey in the USA; and Singapore. The Group also has 11 sales
offices located in major economic centres worldwide.
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