IQE plc : IQE acquires in-house MBE epitaxy manufacturing unit of RFMD and secures seven year wafer supply agreement
(Thomson Reuters ONE) -
Cardiff, UK, 5 June 2012: IQE plc (AIM: IQE, "IQE" or the "Group"), the leading
global supplier of advanced semiconductor wafer products and wafer services to
the semiconductor industry, has signed a multi-faceted agreement to acquire the
entire in-house MBE epi-wafer manufacturing unit of RFMD (Nasdaq:RFMD), a global
leader in the design and manufacture of high performance RF components and
compound semiconductor technologies, and has secured a long-term wafer supply
agreement for exclusive provision of all of RFMD's MBE wafers and for provision
of a majority of RFMD's MOCVD wafer requirements.
Highlights
* IQE acquires fully furnished epi manufacturing plant, including 16
operational MBE tools
* Seven-year wafer supply agreement
* Significantly extends leadership position in wireless industry supply
* Powerful position in CPV market with up to $35m revenue capacity for CPV
wafers
* Consideration effectively funded through future wafer discounts
* Immediately earnings enhancing, significantly earnings accretive in future
years
Dr Drew Nelson, President and CEO of IQE, said
"This landmark agreement with RFMD, one of the true global leaders in the
wireless semiconductor industry, provides us with a significant step up in our
manufacturing capacity, bringing substantial financial and scale benefits to the
Group. This is a clear win-win for both organisations.
"The deal secures IQE world class epi-wafer production assets and staff,
together with a long term wafer supply agreement, further strengthening our
leadership position in the supply of wafers to the global wireless industry.
"The spare capacity currently existing within the transferred facilities will be
applied to the manufacture of CPV solar wafers, enabling IQE to rapidly build a
global leadership position in the supply of wafers for the burgeoning CPV sector
as a result of our previously announced agreement and exclusive supply contract
with CPV technology partner Solar Junction."
Strategic rationale
The assets being transferred to IQE include a fully fitted clean room of over
90,000 sq.ft, 16 MBE manufacturing systems and equipment, all housed in a
135,000 sq.ft. stand-alone building in Greensboro, North Carolina. The value of
the transferred assets is approximately $27 million. The local management and
employees for the unit (consisting of 70 people) will also transfer directly to
IQE.
There will be no upfront cash outlay for the transfer of the assets, resulting
in no IQE shareholder dilution. In exchange for the transfer of the assets, the
parties have agreed to a long term wafer supply agreement with a minimum
purchase commitment of $55m over the first two years, whereby IQE will supply
all MBE wafer requirements and a majority of RFMD's MOCVD wafer requirements
under a discounted pricing arrangement.
The transaction will result in major enhancements across all key Group
activities, particularly in our products for the wireless sector through
increased purchasing power and greater manufacturing efficiencies.
IQE intends to use unallocated capacity from this facility to rapidly accelerate
its wafer supply to meet the dramatically growing demand for CPV Solar products
in relation to the technology transfer and exclusive wafer supply agreement with
Solar Junction, announced earlier this year. This is expected to allow the wafer
production of solar products of up to $35 million annually without the need for
significant up-front capital expenditures by IQE.
The transaction will be immediately revenue and earnings enhancing to IQE,
whilst free cash flow generation will reflect the discounted wafer pricing
agreed between the parties.
Similarly, RFMD expects the outsourced wafer supply model to improve its
operating performance by lowering its manufacturing costs, improving its return
on invested capital, and supporting more predictable financial results.
The transaction is expected to close within a few days.
Contacts:
IQE plc
+44 (0) 29 2083 9400
Drew Nelson
Phil Rasmussen
Chris Meadows
Espirito Santo Investment Bank
+ 44 (0) 20 7456 9191
Richard Crawley
James Bromhead
Canaccord Genuity
+ 44 (0) 20 7523 8000
Simon Bridges
Cameron Duncan
College Hill
+44 (0) 20 7457 2020
Adrian Duffield
Kay Larsen
Rozi Morris
Note to Editors
About IQE
IQE is the leading global supplier of advanced semiconductor wafers with
products that cover a diverse range of applications, supported by an innovative
outsourced foundry services portfolio that allows the Group to provide a 'one
stop shop' for the wafer needs of the world's leading semiconductor
manufacturers.
IQE uses advanced crystal growth technology (epitaxy) to manufacture and supply
bespoke semiconductor wafers 'epi-wafers' to the major chip manufacturing
companies, which then use these wafers to make the chips which form the key
components of virtually all high technology systems. IQE is unique in being able
to supply wafers using all of the leading crystal growth technology platforms.
IQE's products are found in many leading-edge consumer, communication, computing
and industrial applications, including a complete range of wafer products for
the wireless industry, such as mobile handsets and wireless infrastructure, Wi-
Fi, WiMAX, base stations, GPS, and satellite communications; optical
communications, optical storage (CD, DVD), laser optical mouse, laser printers &
photocopiers, thermal imagers, leading-edge medical products, barcode, ultra
high brightness LEDs, a variety of advanced silicon based systems and high
efficiency concentrator photovoltaic (CPV) solar cells.
The manufacturers of these chips are increasingly seeking to outsource wafer
production to specialist foundries such as IQE in order to reduce overall wafer
costs and accelerate time to market.
In February 2012, IQE made a strategic investment and exclusive wafer supply
agreement with leading edge Concentrated Photovoltaic ("CPV") cell developer and
manufacturer Solar Junction Corporation ("SJC"). The move marked a significant
step in its strategy to become a leading global supplier of CPV wafers for the
solar power markets.
IQE operates a number of global manufacturing and R&D facilities: Cardiff,
Milton Keynes and Bath in the United Kingdom; Bethlehem, Pennsylvania, Somerset,
New Jersey and Spokane, Washington in the USA; and Singapore. The Group also has
11 sales offices located in major economic centres worldwide.
www.iqep.com
About RFMD
RF Micro Devices, Inc. (RFMD(®)) is a global leader in the design and
manufacture of high-performance semiconductor components. RFMD's products enable
worldwide mobility, provide enhanced connectivity and support advanced
functionality in the cellular handset, wireless infrastructure, wireless local
area network (WLAN), CATV/broadband and aerospace and defense markets. RFMD is
recognized for its diverse portfolio of semiconductor technologies and RF
systems expertise and is a preferred supplier to the world's leading mobile
device, customer premises and communications equipment providers.
Headquartered in Greensboro, N.C., RFMD is a ISO/TS 16949-, ISO 9001-, and ISO
14001-certified manufacturer with worldwide engineering, design, sales and
service facilities. RFMD is traded on the NASDAQ Global Select Market under the
symbol RFMD.
www.rfmd.com
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originality of the information contained therein.
Source: IQE plc via Thomson Reuters ONE
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Datum: 06.06.2012 - 08:00 Uhr
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News-ID 153556
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