News Article

Fab Move Costs Hurt Detector Company

Advanced Photonix's efforts to regain profitability have been hit by a number of obstacles, including its plans to streamline optoelectronic chip manufacturing operations.

Increased costs of consolidating wafer fabrication at Advanced Photonix has contributed to a $1.9 million quarterly net loss, in a set of financial results that one analyst described as “disquieting".

This has come in the three months ended September 2007, in which the Ann Arbor, Michigan, headquartered maker of light detectors grew its sales 6 percent sequentially to $6.5 million.

API recorded $1.6 million in quarterly telecoms revenue, based partly on sales of InGaAs avalanche photodiode and PIN high-speed optical receivers, a fall of 10 percent over the same period in the previous year.

The downturn in telecoms revenue was partly due to redesign of 10 Gb/s APDs for an optical networking customer who required a new specification. API's next generation 40 Gb/s detectors also suffered from delays to introduction with customers.

An 183 percent jump in sales, to $1.4 million, from the company's GaAs and InGaAs-based terahertz imaging systems for medical applications offset the telecom problems. However, the deal was a one-off, and future revenues are likely to return to previous levels.

Another hitch came in the company s tie-up with US Homeland Security, who are looking to use API s terahertz detectors for radioactive materials. API recorded no income for the contract in the most recent quarter, but will record revenue against this in the upcoming six months. After this point it is hoping to market the systems for use in industrial settings.

Fab consolidation and plant closure upheaval rounded out the tricky quarter, as API tries to reduce overheads relating to operations it has bought over the past five years. The company is to move all its fabrication activities to Ann Arbor, the historical base of Picometrix prior to its purchase by API, in a switch financed partly by tax incentives.

After moving the silicon fab coming from its purchase of Silicon Sensors, Inc., API is aiming to close the Dodgeville, Wisconsin facility that it was based in by the end of 2007. The company expects to finish the process by concluding the move of its Camarillo, California, III-V fab operations to Ann Arbor in the next six months.

The total cost of these moves has grown to $2.2 million, contributing to API s expanding loss alongside costs arising from financial restructuring.

Yet thanks to these consolidation efforts, API s management believes the company is on the right track.

“Our focus has to be on the consolidation effort we're making," said API s CEO Richard Kurtz, “which will result in significant cost savings and position us solidly for the future."

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