In an update on current trading and confirms its expectations for full-year 2015, epiwafer foundry and substrate maker IQE plc of Cardiff, Wales, UK says that it is on track to achieve year-on-year revenue growth, with second-half revenue expected to be up sequentially over first-half 2015.
The widely reported weakness in the mobile and smartphone markets has impacted wireless wafer sales in the fourth quarter, but this has been offset by higher non-wireless revenues, including from photonics and technology licensing, demonstrating the increasing robustness of IQE's business model, the firm says. It adds that this has given the board confidence that financial performance for the full year remains in line with its expectations, which should result in net debt of about £25m by end-December 2015.
The market updates of key wireless customers have reflected mixed performance in second-half 2015, and a number of recent company announcements have highlighted broad weakness within the mobile and smartphone segments. Nevertheless, the outlook for 2016 and beyond remains positive, says IQE, due to increasing global connectivity and the continuing growth in data traffic.
The photonics business has continued to perform strongly, delivering significant double-digit revenue growth, driven by a wide array of end-market drivers including data centers, optical communications and a broad range of sensing applications.
The InfraRed and CMOS++ segments have also performed well, in line with expectations, and first pilot-production revenues have been generated from Solar. During 2015, IQE entered into two joint venture arrangements, in Singapore and the UK (which have started positively), and IQE has licensed additional IP during second-half 2015 to enable acceleration of the joint venture business plans. The firm is also continuing to explore additional licensing opportunities to take advantage of the increased IP portfolio that it has acquired and developed during the last two years.
As a consequence, the board remains confident that IQE is on track to achieve its financial expectations for the full year. The firm will report its full-year 2015 results on 22 March 2016.
"The results reflect continued delivery of our revenue diversification strategy," says chief executive Dr Drew Nelson. "Despite areas of weakness in the wireless market during the final quarter, the group has been able to mitigate the impact through higher revenues in other areas of the business," he adds. "In line with its strategic plans, the group is continuing to develop a broad IP portfolio through both internal development, and selective transactions such as the recent cREO deal. These foundations are increasingly enabling growth across the diverse markets for compound semiconductor technologies, including Photonics, Solar, Power, InfraRed and CMOS++. This is also creating complementary IP licensing opportunities. As a result, the Board remains confident of continued growth in our business."
