Trading Update

30 May 2006 07:01

IQE PLC30 May 2006 Immediate release 30 May 2006 IQE plc Trading Update pre Annual General Meeting to be held at Cardiff on 31 May 2006 at 10.00am "Continued strong growth" IQE plc (the Group), the leading global supplier of customised wafer productsand outsource wafer services to the semiconductor industry, is pleased toprovide a pre Annual General Meeting Trading Update. Commenting on the Group's performance, Dr Drew Nelson, President and CEO said : "Trading has been very strong since the start of the year, with sales in thefirst quarter up 19% on Q4/2005 and up 53% on Q1/2005. All parts of the custom epitaxy business have continued to show strong growth in2006. The wireless sector is particularly strong, driven by the continuingdemand for mobile handsets and infrastructure projects such as wireless LAN andWi Fi. The mobile handset market is predicted to grow by an additional 15% in2006 and the Group will benefit greatly from this growth through increaseddemand for its gallium arsenide materials. In addition, the greatersophistication of handsets with much more functionality and multiple radiofrequency components in each unit will only add to this demand. The Group's major outsourcing contracts are all performing ahead of expectationsand the accelerated qualifications carried out in H2/2005 have now moved intofull production. New qualifications continue well, including several in the FarEast. The opto electronics marketplace is also showing considerable strength, and theGroup's Vertical Cavity Surface Emitting laser products are finding rapidlygrowing markets in short distance communications, laser printing and copying,and laser mouse applications. The markets for IQE Silicon and Wafer Technologyare also showing good strength. The growth which we are experiencing has increased our working capitalrequirements. In anticipation of this, we secured a working capital facility of£5m from our bankers towards the end of 2005 in the form of a £3m loan and a £2moverdraft facility. The loan was fully drawn down in December. The overdraftfacility has not been utilized. The Board is confident that its existing cashresources and the overdraft facility will together provide sufficient funds tosupport our organic growth expectations. Although there has been a substantial weakening of the US dollar in recent weeksof around 7% compared with Q4/2005 which has inevitably had an impact on oursales revenue, that impact is somewhat less than it would have been in the pastbecause of the natural hedge provided by the higher percentage of the cost basenow being denominated in US dollars. Notwithstanding this, we continue tocontrol our costs very rigorously and implement new cost saving measureswherever practicable We are now moving into a situation in the market where outsourcing is featuringmore prominently in many companies' strategic considerations because thesemiconductor industry is now becoming capacity limited in several areas. We seethis as an advantage to the Group as our breadth of product range, large scaleproduction capacity and economies of scale are key considerations in attractingnew business. We therefore look forward to continued strong growth as theGroup's capacity utilisation continues to increase and the industry continues toexpand". Contacts: IQE plc :Drew Nelson +44(0)2920-839400Stuart Hall +44(0)2920-839400Chris Meadows +44(0)2920-839400 Buchanan Communications :Tim Thompson +44(0)2074-665000 This information is provided by RNS The company news service from the London Stock Exchange