IQE posts full year 2023 results
Strategic progress in a challenging market with a return to growth in H2
IQE plc, the UK supplier of compound semiconductor wafer products, has announced results for the full year ended 31 December 2023, in which revenue decreased 31 percent to £115.3m (FY 2022: £167.5m). .
Americo Lemos, CEO of IQE, commented: “I am pleased with the resilience of the business and dedication of our people despite 2023 being a particularly challenging year for the semiconductor industry. As forecast, IQE returned to double digit growth in H2 over H1, and additionally took strategic actions to reshape our cost base as part of our ongoing commitment to improving margins and profitability."
He added: “We made good progress against our diversification strategy following our investment into GaN capacity, with new customer design wins in the Power Electronics and Automotive sectors. Buoyed by the ongoing industry recovery, IQE is well positioned within the global value chain to deliver sustainable growth and capture opportunities in 2024 and beyond.”
On a sector basis: wireless revenue of £53.9m (FY 2022: £76.0m) was down 29 percent year-on-year, the result of high inventory levels in the market and delays to 5G infrastructure deployment; photonics revenue of £59.1m (FY 2022: £88.7m) was down 33 percent year-on-year, reflecting the slowdown in Asian telecom infrastructure programmes, as well as high inventory levels due to weak demand impacting 3D sensing; and CMOS++ revenue of £2.3m (FY 2022: £2.8m) was down 18 percent, reflecting elevated inventory levels caused by weak demand for consumer goods.
Adjusted EBITDA of £4.3m (FY 2022: £23.4m), showed a decline of 81 percent on a reported basis, due to underutilisation of manufacturing capacity.
Business highlights
Business highlights include: the launch of a new VCSEL capability for high-speed optical interconnects used in AI data centre applications; high volume production ramp of new VCSEL for advanced 3D sensing applications with Tier 1 handset manufacturer; deployment of a GaN power capacity in the US and UK; continued development of RGB microLED portfolio through engagement with multiple Tier 1 display manufacturers; development of a new disruptive 8-inch Ge based platform for use as a red emitter in microLED displays; and scheduled delivery of the first display grade 8-inch GaAs and Si-based wafer products will commence in H1 2024.
Board changes
Jutta Meier joined the board as CFO in January 2024. The board also continued to refresh its industry expertise with Bami Bastani and Maria Marced joining asnNon-executive directors during the year, following the retirement of Derek Jones. All three bring a wealth of experience from international semiconductor industry heavyweights including Intel, GlobalFoundries and TSMC.
Harmesh Suniara was another addition to the board during the year representing Lombard Odier, a major IQE shareholder, and adding significant capital markets experience. Female representation on the board now stands at an above-average 44 percent.
IQE’s executive leadership team was strengthened with the appointment Peter Rabbeni as SVP or communications infrastructure and security. He was joined in January 2024 by Rina Pal-Goetzen as VP of government affairs, focusing on engagement with the US Government, specifically in regards to CHIPS Act funding.
Current trading and outlook
IQE says there are increasingly positive signs that the global semiconductor industry is recovering from what has been an unprecedented cyclical downturn in terms of both its extent and duration. IQE saw recovery in H2 2023 which has continued into Q1 2024, with inventory levels beginning to normalise and customer demand recovering.
Trading during Q1 has been in line with the board’s expectations and the order book for the remainder of H1 is strengthening. IQE expects to see this improvement continue through 2024, despite persisting uncertainties in the global economy.
The group says it has taken steps to optimise its cost base and will continue to drive efficiencies in order to improve margins and profitability.
