Profits rise at IQE after smartphones boost product demand

7th Sep 2011 09:47

IQE, the global supplier of semiconductor wafers to chip manufacturers, has reported strong results for the year, reflecting market trends towards smartphones and the demand for ever-faster technology. Revenues were up 16% from £33m to £38.3m, resulting in a 28% rise in pre-tax profit of £2.8m, up £0.6m from the previous year. Chief executive Drew Nelson, told Digital Look: "Wireless is our key driver, equating to around 75% of our business. It will continue to be very strong over the next several years to come as smartphones require many more chips than standard phones which tend to use just one. We estimate that our products are in about 75% of the world's smart phones." Despite the strong result the company saw a drop in its share price, likely to be due to the group's warning that its outlook is, "tempered by recent growing uncertainty in the global economy," which risked the "possibility of inventory correction". Despite this warning, Nelson said there was no evidence of this and blamed the drop on market nervousness. "As the suppliers to the top 12 chip-makers we are able to pick up any slack if one of the 12 underperforms. We have a good risk mitigation strategy - it's not perfect, but it's better than any other out there," he continued. "With the development of smart phones, the sector is being driven by a structural change in how it operates. There's still 72% of phone users to convert to smartphones - wireless technology will continue to grow." The company's optoelectronics division, which make connection wires which allow for faster production, saw an organic revenue growth of 16%. Nelson said: "Around 20% of our business is driven by optoelectronics, which are set to replace the usual copper cables used to connect computers, TVs and peripherals as demand for greater productivity grows." He added: "Our business is also developing in two other key areas, consumer applications, such as laser treatments, and projectors, which will allow consumers to project images onto surfaces from devices such as their phones." The share price fell 7.03% to 29.75p at 12:43. NR