24 November 2020
IQE expecting over 20% revenue growth for full-year 2020
In a trading update, epiwafer foundry and substrate maker IQE plc of Cardiff, Wales, UK says that, after a record first-half 2020 revenue performance, second-half 2020 has continued with positive momentum in both the Wireless and Photonics business units.
This has been evidenced by IQE receiving its largest military & defence sector purchase order to date from a major US customer, for both infrared and high-performance RF applications. With a combined value of more than $10m, the order will be deliverable over the next nine months.
Wireless business unit
IQE says that strong year-on-year growth in 2020 for its Wireless business unit has been driven by:
- demand for gallium arsenide (GaAs) wafers for 5G handset power amplifiers fuelled by growing end-market demand for ‘5G ready’ smartphones;
- sales of gallium nitride on silicon carbide (GaN-on-SiC) wafers for 5G infrastructure related to initial deployments of 5G base stations; and
- sales of high-performance GaN-on-SiC wafers for military RF applications.
Photonics business unit
Strong year-on-year growth in 2020 for the Photonics business unit has been driven by:
- consistently high demand for GaAs vertical-cavity surface-emitting laser (VCSEL) wafers for 3D sensing applications - IQE says that it retains a market-leading position in 3D sensing epitaxy and has been central to new applications being launched for this technology in its existing supply chains; and
- sales of high-performance gallium antimonide (GaSb) wafers for military & defence infrared applications.
For full-year 2020, IQE expects year-on-year revenue of growth of over 20% to at least £170m, exceeding the previous guidance (provided with the interim results on 8 September) of at least £165m. The firm also anticipates delivering a mid-single-digit £m adjusted operating profit.
With a reduction in capital expenditure in full-year 2020, along with a positive trading position and continued focus on cost control, net debt is expected to be low-single-digit £m, representing a significant strengthening in the balance sheet position since the prior year-end balance of £16m net debt.
IQE anticipates that underlying demand for the technologies that its products enable will remain strong heading into 2021.
In particular, it expects that demand for 5G-related products (both handset and infrastructure) will continue to grow over the next few years as the mega-replacement cycle of 5G deployments gathers pace around the world.
In addition, IQE says that it has a leading portfolio of Photonics products, for 3D sensing and other applications, making it well positioned for growth.
“We are delighted to be reporting such a strong all-round financial performance, with anticipated revenue growth of over 20% for the full year, despite the ongoing uncertainty in the external environment,” comments CEO Dr Drew Nelson. “I am exceptionally proud of the whole IQE team whose dedication and commitment has enabled us to operate without interruption throughout this period.”