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IQE's adjusted pretax profit up 18% as business unit's sales rise 109%
Welsh semiconductor technology firm IQE reported on Tuesday that its adjusted profit before tax rose 18% in 2017 to reach £24.3m when compared to the previous year.
The company's profits benefited from a 16% increase up to £154.5m as the company's wafer sales, which made up 99% of revenues in 2017, increased by 21% throughout the year to £152.6m.
Furthermore, operating profits derived from wafer sales rose 58% to £24.5m as sales were driven by market facing business unit Photonics which saw a 109% increase in sales to £47.6m.
Wafer products manufactured by IQE are used by global chip companies for a wide range of high tech applications, including Apple's iPhone X.
Drew Nelson, chief executive of IQE, said: "This substantial growth is largely being driven by VCSEL products for mass market consumer applications that ramped through H2 of 2017. The depth and breadth of customer engagements in Photonics provides a solid platform for continuing strong growth with several new product launches forecast over the next 12-18 months for multiple OEMs."
IQE expects that Photonics will grow by approximately 35% in 2018 through the expansion of products currently in production and the introduction of new technologies and additional market opportunities.
The company also projects steady growth from business units Wireless and InfraRed of approximately 5% and between 5-15% respectively, as customer engagement is broadening for both units.
"Our business model is evolving from being the global leading supplier of advanced semiconductor wafers, to becoming a globally leading 'advanced materials solutions' company where our unique innovative materials and associated nanoscale fabrication technologies provide a route for our customers to push the boundaries of chip performance, extend semiconductor integration capabilities and thereby reduce the cost barriers to broad consumer adoption," said Nelson.
AIM traded company IQE further acknowledged that the key smartphone market remained flat in 2017, with shipments at 1.47bn units, but said that the "relentless increase in data traffic" will continue to drive the need for sophisticated wireless chip solutions as the market steers towards 5G communication.
As of 1155 GMT, IQE's shares were down 1.44% at 140.55p.