iqe plc agm presentation · cagr 2019-2024 = 30% biggest driver for optical commsis datacom driven...

IQE plc AGM

PRESENTATION

25th June 2019

2018/19 Business Highlights • A year of significant investment in capacity expansion and site

rationalization

• New mega-foundry in Newport opened and ten reactors delivered and installed

• Throughput, uniformity and yield all significantly better than expected at the outset of the Newport project and now operating 24/7 from March 2019

• Multiple high intensity customer audits completed successfully,

• Mass Production commenced in May for lead OEM supply chain on 4 tools, expect two other customers will commence mass production in H2 2019

• 13 other photonics customers already qualifying the Newport facility

• Taiwan expansion will increase dedicated wireless capacity from that site by 40% bringing operational efficiencies; completed on time and budget, 2 high volume Asian supply chains for PAs in qualification

• Expansion in Massachusetts (GaN) and Milton Keynes infrared completed end H1 2019

• Multiple investment in VCSEL qualification programs extends global footprint for 3D sensing. Engagement with c 30 VCSEL chip manufacturers

2018/19 Business Highlights (cont)

• 5G opportunities secured as market interest accelerates

• Research and Development activity focused on:• next generation materials for high performance Power Amplifiers;

• Porous RF switches and Crystalline RF Filters for 5G;

• next generation VCSELs and diffusers for VCSELs;

• Full service 10G/25G DFB lasers, PIN and APD detectors for Datacoms;

• infrared materials for high volume consumer markets

• Acquired cREO™ technology and patent protected IP portfolio from Translucent for US$ 5m in September 2018

• Milestone 1st production order of US$ 250k received for DFB edge-emitting lasers using “NIL”

• Re-negotiated a long term supply contract with Tier 1 wireless customer – extending product range and share

• Successful recruitment of Tim Pullen from ARM as CFO – took up office on 4th February 2019

Overview of IQE’s Markets and Growth

Opportunities

Enabling advanced technologies

5G

InfraRedImaging

IQE’s product roadmaps span multiple high growth markets


5G landscape: long-term

Connected autonomous vehicles

Smart-city cameras

Industrial and vehicular automation

Gigabytes in a second

Work & play in the cloud

Augmented reality

Mission critical broadband

3D video / 4 & 8K screens

Massive IoT

Enhanced Mobile Broadband

Low Latency

Sensors for connected devices

Voice/data

Enabling advanced technologies2-Jul-19 7

5G Opportunity Overview

Infrastructure Handset 5G mm-Wave

Network backboneFiber fronthaul

Hyperscale Datacenters

1000x bandwidth100x connected devices FTTP

IQE5G Infrastructure

Opportunity


5G Antenna Arrays

2-Jul-19 9

Each element has its own T/R

5G Materials Choices

Si CMOS and SiGe require >10x the number of antenna elements

relative to GaN


IQE GaN … Industry’s Broadest Portfolio

2-Jul-19 11

1kHz 1MHz 1GHz 10GHz

Frequency

Volta

ge R

atin

g

50V

200V

600V

1,200V

GaN / GaN

GaN/Si

GaN / SiCGaN/Si +GaN/SiC

#1 Merchant Epi Supplier

100GHz

IQE5G Handset

Opportunity


RF Front End (2017-2023) Market Opportunity

2017$15B

2023$35B

Source: Yole Developpement, June 2018


RF Front End – IQE Strategy for Addressable Content (2019 NPIs)IQE Solution

SicREO

Epi Metal

Epi Al(Sc)N

Sputtered / epi-Metal

2-Jul-19 15

IQE’s Content Growth in Handsets

HBT PAs

HBT PAs

HBT PAs

BiHEMT PAs

BiHEMT PAs

Proximity sensors

3D sensorsFace recognitionTOF sensorsCamera focus

Integrated FEM

Proximity sensors

3D sensorsWorld facing / AR

TOF sensorsCamera focus

Accessory sensors

3D sensorsFace recognition

3D sensorsWorld facing / VR

Integrated opticsVCSEL/DOE/WLO

SAW & BAW Filters

5G mm wave

Porous Si Switches

3D Sensing and other VCSEL

markets


VCSEL epiwafer

VCSEL chip

Magnetic storagePrinting

Data centres

Cosmetic

3D Sensing

Industrial Heating

VCSEL Applications

LIDAR


VCSEL market set for long term significant growth


Higher Power Arrays means lots more VCSEL wafers


VCSEL Market Growth


1988: IQE

Established

1994: • First commercial contract

for 3” single multi wafer reactor AX2400

• First 4” VCSEL demo2003:

1310nm VCSEL

2009:World record VCSEL

speed and power

2001:AX2600 G3 reactors

in Cardiff facility

2002:• Red VCSEL

• 1550 Metamorphic

2008:• 10 GB/s VCSEL

technology• EU Visit program

2010:>40GB/s VCSEL

technology

2016: New G4 tools in Cardiff

facility2013:

4” VCSEL in volume production.

2014:• VIDaP programme

• First 150mm (6”) VCSEL epiwafers

2017:• 6” VCSEL production• 14 tools for VCSELs

2019 and beyond: New facility in South Wales,

total of 23 VCSEL production

reactors

IQE VCSEL: 20 Years of Leadership

Optical Communications


CAGR 2019-2024 = 30%

Biggest driver for optical comms is Datacom driven by hyperdatacentres &5G front haul/backhaul


Biggest driver is Datacom 100GbE and above (25G components)


IQE Photonics Product Portfolio for 5G

Detectors

Substrates Wafers

APDDetectors

PINDetectors

SW IRSensors

MW/LW IRSensors

LW IRSensors

MW IRSensors

VCSEL Edge Emitters

VCSEL VisibleVCSEL

RC LED FP Laser

DFB Laser

HP Laser Diode

Emitters VCSEL

5G Fibre Front Haul and Backhaul, FTTP5G Hyperscale Datacentres

Nano-imprint Lithography for DFB lasers

CompoundSemiconductor.net

iQPrint™

DFB laser full service manufacturing solutionEpi growthGrating fabrication

Grating with pitch of ~ 200 nm& width of ~ 80 nm

InfraRed


Edge Emitting Laser Epitaxial ProductsIQE: The leading supplier of edge emitting laser epitaxy for almost 30 years

Volume production across a range of applications, MOCVD & MBE platforms

VCSEL development and ramp translates to enhanced capability applicable to EELUniformity, thickness and doping control, calibration, metrology

GaAsInP

GaSb

3”, 4”, 6”2”, 3”, 4”,6”

2”, 3”, 4”,6”

VCSEL


Infra Red ……..New Product Roadmap

2018 20232019 2020 2021 2022

IRDetectors

IRLasers

AdvancedMaterials

2”-3” InP/GaInAs3”-4” GaSb/InAs

Adoption of IR laser technology in volume consumer applications

Adoption of GaSb detector technology across multiple defence/security platforms

Advanced III-V materials demand drives production

capacity expansion2”-3” InP/AlGaInAs3”-4” GaSb/AlGaSb

High Volume 4”-6” IR detector and laser growth capability serving >$500m TAM

consumer and defence/security markets

2”-4” InP/GaSb/InSb/InAs

Diversification & GrowthCore Products

DEFENCE/SECURITY & LIDAR

WEARABLES, BIO & ENVIRONMENTAL SENSING

COMPUTING, SENSING, IoT

• Transition to largerdiameter wafers (more

die/better yield)

• Production Capacity Expansion

• IR product integration with

siliconDefence/Security è Consumer


Healthcare & Wearables

InP/GaSb EpitaxyHigh sensitivity

specific & tuneablesensors made possible by

compound semiconductors

Low technologyIR sensor

Prevention, Diagnosis, Treatment

Continuous vital signsmonitoring

IQE’s Product Development

Strategy

3D sensing(VCSEL)

DFB(NIL)

IQE Key Technologies road map

4G 5G

LIDAR DOE WLO(QPC)

Security Industrial

Renewables Electric Vehicles

Space High Altitude UAVs

CS on Silicon

Filters/High perf switches/PAs(cREO) SoC

Machine vision

Consumer/Healthcare

Consumer

Terrestrial

InP

Power GaN

SOI

RF GaN

Wafer Bond

GaSb/ InSb

Dilute Nitride

cREOTM

NIL

Quasi

Photonic

Crystal

GaAs

Epi

Metal

SiGe/GaAs/

Ge

InGaAs

III-V on Si


IQE R&D: Leveraging Technology Platforms

Technology Platforms

Porous Silicon

Advanced III-N QPC NIL

Dilute Nitrides

III-V on Group IVRare Earth Technologies


Rare Earth Technology: Enabling Platform Across Multiple Markets

Si

Phot

onic

s

HBTs

IR

Det

ecto

rs

III-V

RFGaN

Pnictides (RE-V)

cREOTM

Epi-twist

GaN Power

RFFilters

AlN

III-NPhotonics

Non

-pol

ar

III-N

Group IVEpi

DBR

cSOI™

Up

conv

ersi

on

ReSi + epi contacts

Epimetal

Polar III-N

IQE’s Global Manufacturing

Strategy


Global Manufacturing Strategy

Global Footprint

EUROPEUSA ASIA

Taunton, MA Greensboro, NC

Spokane, WABethlehem, PA

Somerset, NJ

Newport, UK

Cardiff, UK ⥤ CSC

Milton Keynes, UK

Bath, UK

Taiwan

Singapore ⥤ CSDC

Investment concentrated on three key sites covering each major global region (EU, NA, Asia)

• Newport UK • Flagship Photonics EpiFoundry• Future products to include GaN, IR, Solar, SiPh

• Taunton MA • Flagship GaN Epifoundry, plus wireless, photonics

• Hsinchu, Taiwan • Flagship wireless EpiFoundry, plus Photonics, NIL

• Greensboro, NC • MBE EpiFoundry (wireless, IR, cREO, photonics)

• Milton Keynes/Spokane/Bethlehem • InSb, GaSb, InP substrates and epi

• Bath, UK closed• Somerset NJ, will close Dec 2018. Annual savings usd4m pa


Newport Mega Foundry


IQE Taiwan Facility: Third floor expansion

Facility• 104 k ft2 total space

• 9.6k ft2 cleanroom (Class 1000 with Class 10 hoods for loading)• Room available for future expansion

• World class maintenance facilities to ensure reactor uptime

Epi Reactors• Production GaAs MOCVD (7x6”): 17x Aixtron 2600-G3 R&D MBE• Third floor; capacity for 20 reactors; 3 in place.• Facilitised rooms for 3 more. • Capacity plan being generated for next 1 – 3 yrs


CS Cluster Branding

THE INTERNATIONAL CAPITAL OF COMPOUND SEMICONDUCTOR TECHNOLOGIES


CS Cluster Locations


European semiconductor clusters ..creating Europe’s 5th cluster but World’s 1st

Compound Semi Cluster


Tech Background

My first four months …..

Strength

Opportunity Scaling


Trading Update issued June 2019

• First Half impacted by weak handset market as previously guided• First Half Revenue of £65-68m expected (£68m consensus)• Risk of Huawei impact exacerbated by broader market weakness & uncertainty• Specific customer issue in Indium Phosphide lasers highlighted• Supply chain shifts from US to Asia becoming evident with IQE well placed to

adapt (albeit with short-term delays)• Full year Revenue of £140-160m now expected (£175m consensus)• Operating profit margin of less than 10% but still profitable• Forecast net debt position within the current Revolving Credit Facility ($35m

USD)


5 Year Revenue Profile

0

50

100

150

200

2015 2016 2017 2018 2019 Guidance

Revenue - Low Revenue - High

2019 Revenue Variables- Handset market volumes

- Volumes from new Asia

market chip companies

(InP lasers, Wireless)

- GaN sales for 5G base

station deployments

2020 Trajectory Variables- Conclusion of US-China

trade tensions

- Recovery of global

technology market from

2019 downturn

- Pace of global 5G roll out

- Android adoption of 3D

sensing

- Proliferation of 3D sensing

in world facing cameras


‘Infrastructure’ phase of expansion is complete in 2019

Future capex profile will linear between revenue and numbers of reactors

Pace of investment depends on pace of 5G rollout and 3D sensing adoption with prudence being exercised in the current market environmentFY16 FY17 FY18 FY19 FY20

Newport Epi Foundry & Reactors Taiwan and MA Expansion Other Capex

Capex Guidance remains unchanged

£40m

£30m

Capacity Constraints

Photonics Opportunity evident

Investment in Capacity

£15m

Revised Segmental Revenue Guidance for 2019(USD constant currency)

March Revenue Guidance

June Revenue Guidance

-15% YoY -20 to -25% YoY

> 50% YoY < 30% YoY

+15% YoY +15% YoY

iqe plc agm presentation · cagr 2019-2024 = 30% biggest driver for optical commsis datacom driven...

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