Business expectations in the years since the market crash of 2000 have been restrained and sensible, according to Drew Nelson, head of epitaxial wafer firm IQE.
Nelson was arguing that recent growth in the electronics industry is measured and sustainable. “It is a sensible market, there has been an underinvestment in capacity in the last few years.
"Companies have been underinvesting in the last three to four years, they has been more caution. There are growth markets in mobile handsets, devices, infrastructure equipment,” said Nelson.
IQE is heading towards a break-even point it estimates will require revenues of around £29m. In 2005 the firm increased revenues by over 36 per cent to £20.9m. Half of the firm’s sales now come from the wireless market, said Nelson. “Growth will continue strongly this year,” he said.
There was a gross loss of around £530,000 in 2005, compared to a loss of £3.8m in the year previously. However, £460,000 of that loss was recorded in the first half of the year and just £76,000 in the second half, showing the steadily improving situation at the firm.
IQE is running at about 30 per cent of its capacity and could reach its break-even revenue at 35 per cent capacity said Nelson. So far IQE has secured a couple of long term agreements for contract manufacturing a company’s wafer supply.
A lot of companies have in-house manufacturing for epitaxial wafers, said Nelson and persuading these to move to contract manufacturing will be key for the firm. “We have a powerful business model. It can save a firm between 20 per cent and 30 per cent of its manufacturing cost,” maintained Nelson.
The firm’s development of a strained silicon on insulator (SOI) product is likely to be realised this year, said Nelson, which the firm will then offer to chip manufacturers. “We will be able to make it to order,” said Nelson.
www.iqep.com