IQE - doing what Minervini predicts

Monday, Jun 19 2017 by
49


This stock seems to be taking off. Although it doesn't pay a dividend it has a great "moat". It is a world leader in several areas such as photoelectronics and wafer manufacture. Links to several helpful reviews have been posted on the LSE discussion board under IQE.

I am long in this share.

Recent post page 4 LSE discussion board for IQE
"Investor interest is growing - the CFO has recently been presenting in the USA and says that many analysts have been very interested in hearing what IQE have to say. Interestingly the American analysts appear to understand the proposition better than their UK andEuropean counterparts, but also in the UK there has been a recent clamour to meet and discuss the company. I have long held the notion that the recent SP growth has been driven in large part by US investors, that would appear to be a situation that's growing, certainly IQE is going from a proposition that was uninteresting to a situation where IQE are literally inundated with interest from the analyst and investment communities :-)

I asked about utilisation rates which were quoted as being 50% last year and also the ability to respond to surges in demand. As expected no direct answer was given to utilisation other than its obvious the rate has gone up significantly :-) , Interestingly in response to Hammerd's question it only takes 9 months from reactor install to it being fully productive.last years CAPEX increase was to supply to the demand they knew was coming folks, I expect that R+D and CAPEX will have to increase to supply the demand- which is great. There are no plans for acquisitions, but of course no- one should ever say never, just in case an opportunity arises, but none is imminent.

Lots can be gleaned from body language, All The board were present, it's blindingly obvious unless they are the best actors in the world ( and why would they) that things are going extremely well.
The point was made that the political shenanigans and Brexit have no impact on investment in the CS cluster . Simon Gibson made the point that the influential MIT publicly state that the Compound Semiconductor industry led by IQE is WORLD CLASS compare to its completion :-)

Links from LSE pages 4/5 and there are more earlier this year
https://www.ft.com/content/7b986bec-349e-11e7-99bd-13beb0903fa3
Http://investing.thisismoney.co.uk/broker-views/


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IQE plc is a United Kingdom-based holding company. The Company is engaged in the research, development and provision of engineering consultancy services to the compound semiconductor industry. The Company's segments include wireless, photonics, Infra Red and CMOS++. The Company is the manufacturer and supplier of Compound Semiconductor wafers or epiwafers using a process called epitaxy. Its photonics business enables a range of end applications, from data communications and advanced optical-fibers, to sensors in consumer and industrial applications. It operates through business units, including wireless, photonics, InfraRed, CPV (advanced solar), power switching, light emitting diodes (LEDs) and advanced electronics. It produces atomically engineered layers of crystalline materials containing a range of semiconductor materials, such as gallium, arsenic, aluminum, indium and phosphorous. The Company has operations in the United States, Asia and Europe. more »

LSE Price
70.3p
Change
-4.4%
Mkt Cap (£m)
570.8
P/E (fwd)
18.4
Yield (fwd)
n/a



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449 Posts on this Thread show/hide all

Edward John Canham 2nd Apr 430 of 449

Apple seems to be unsettling its supply chain. Intel down 7% last time I looked.

Problems for IQE (LON:IQE) ?

Phil

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ricky65 3rd Apr 431 of 449

I've enjoyed watching IQE (LON:IQE) on the sidelines for the last few months as it has been a great battle between the bulls and bears (lots of volatility and whipsaw action back and forth). I can't say I'd be enjoying it as much if I were a holder! Looking at the technicals I'd say that the bears have it at the moment (below the 200 MA, ~28% off the 52 week high). Interesting to see how it pans out.

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nickwild 4th Jun 432 of 449


Very positive RNS today. Price up. N1 Singer reiterates positive stance. AGM and site visit today

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kalkanite 5th Jun 433 of 449
3

An excellent post from Sweenoid / Dave Sweeney about the IQE AGM yesterday. This was posted on ADVFN.....


My AGM report-sit down, make a cup of tea.

If anybody saw two middle-aged men wandering circuitously down Penarth High Street last night I hold my hands up and admit that Ken ( Hammerd)and I were responsible.! The AGM this year was a very successful affair, I took no written notes so the following is a summary of what I can recall after rather a boozy( understatement) post AGM, please can other attendees dot the I’s and cross the t’s and fill in what I have left out ( thanks Xylos for your contributions)

First things first, it was a delight to meet so many other investors- too numerous to mention, The usual number count for previous AGMs was approximately 6 to 10, so I’m sure that management were relieved that they had hired a large venue for this year’s meeting, because it was extremely well attended (60-70?).
Yesterday’s RNS was a very welcome start to the day, with 2 highlights for me, 1st the obvious statement “ we are actively engaged in VCSEL qualification programmes with over 10 additional key VCSEL chip manufacturers, which are progressing in line with the board’s expectations”, I bet anything that no one reading this can name half of those New customers ;-), I certainly can’t, that list must occupy almost the entirety of worldwide VCSEL chip firms,remember that list WILL NOT include Lumentum and Himax and Finisar who ( imho)we are already supplying ( the 1st is the biggie). I Will come back to this when I discuss competition later in what is likely to be a very long read.

The second main highlight for me of the RNS was the future appointment of Phil Smith to non-executive Chairman, which in large part answered my intended succession planning question.Phil Smith was my preferred first choice and I’m absolutely delighted ,as everyone should be, this guy is high calibre.He was CEO of Cisco for many years , he has a huge reputation in the industry and is widely respected and I can’t think of anybody better suited to replace Godfrey Ainsworth in the chair. As a new non- exec last year and now a veteran, he did his best to introduce and chat to as many investors as possible, a top class acquisition as a future chairman. In my conversation with him, he made his ambitions for the company clear, his enthusiasm and optimism was obvious and infectious, he is a good and natural communicator and will be a massive asset to IQE going forward

OK, the meeting and in no particular order, 1st the all important ‘competition’ question. To be honest and frank, our CEO basically forensically ‘dissed’ them, whilst demonstrating no complacency at all. He reiterated that the ‘outsource model’ is the way to go, for chip manufacturers and the barriers to entry. I have talked a lot about this in the past, so won’t repeat myself, but the key message to take away is the following, and imho this forms almost the entirety of IQE’s competitive advantage in the next 5 years. IQE is WINNING market share from its competitors in the ‘wireless’ division, despite the opposition being aggressive on pricing!epitaxy for wireless wafer epitaxy is relatively simple, each wafer having only 10-20layers. What hope have they got of ‘stealing’ IQE’s VCSEL business where wafers contain near 400 layers? , and are magnitudes more difficult to design and manufacture, whilst IQE are pinching their bread and butter business from under their feet? I would discount serious opposition emerging for many years to come...and so does the CEO, he went through every competitor they have and explained why that is the case, I thought he was rather persuasive;-)

Next,Patents and the possibility for new licensing revenues :-)

IQE have acquired a rich vein of patents, in 3 interesting area’s,cREO and most recently Quasi Photonic Crystals (QPC). This advanced materials technology complements the Group's organic development of NanoImprint Lithography ("NIL"), and broadens the potential application of NIL beyond IQE's current focus on advanced DFB lasers. Indeed, the patents acquired have applications in Optical components including VCSEL and edge emitting lasers,modulators, silicon photonics, fibre optic systems, micro LED displays, image sensors including Diffractive Optical Elements (DOE) and biosensors.
The cREO and QPC patents were acquired for peanuts -relative to their earnings potential-$5million and $500,000 respectively. Very interestingly the QPC patents were independently valued at $60million 3 years ago! So how did IQE get these patents so cheaply, the QPC in particular, well Silex( cREO) and Luxtaltek ( QPC) had no route to monetise their patents, they were literally stuck with great IP but no way to use it - a bit like being given £1million for a shopping spree for 4 hours when all the shops are closed- it’s worthless ;-). They were both prepared to literally give it away for a royalty stream down the line when IQE had ‘enabled’ and ‘monetised’their technology.
just think about this potential scenario, it’s possible. CMOS is a huge growth area ( Compound Semiconductor material on silicon) but its complex and difficult because the 2 materials basically don’t like being combined-a specifically designed ‘layer’ of cREO between the two, solves the issue. Now consider IQE Licensing this patented technology to someone like ....Intel, for a licence fee and a royalty revenue stream, mmmmm gets interesting doesn’t it, and the absolute beauty is that there can be no patent infringement by all licensee or competitors, all you have to do is snap a wafer in half, demonstrate the cREO layer and bobs your uncle, there’s the infringement , no costly patent infringement costs ;-).
after yesterday I think there are multiple opportunities with cREO, NIL and fascinatingly with QPC to generate a very meaningful revenue.

Behind the scenes IQE have and are, actively engaging with institutional investors, recently they attended investor roadshows in New York, Boston and San Francisco, the CEO is visiting a major US investor in 2 weeks at the investors request. It’s interesting that institutions that participated in the recent offering are telling IQE that they are picking up shares from PI’s as the SP has reduced. IQE are intent on increasing the % of institutions and are finding the USA investors much more tech savvy.
It’s interesting that in previous years the Chairman has expressly rejected an imminent move to the ‘ main market’, that attitude has softened and from discussions yesterday I think that move will occur in 2019, indeed without Phil’s tragic death I think it may indeed have been announced this year? This will be done with the single aim ( excuse the pun) of increasing institutional interest. So there is indeed a huge amount of activity going on , but they aren’t communicating that.

That brings us to IR and PR. I think I, in a direct comment to Drew Nelson mid presentation, and also many other investors in one on one’s, made it clear that IQE simply has to do this better. We understand the restrictions imposed by NDA’s BUT there are always ways and means of improving news-flow,without infringing confidentiality. As a simple example I stated that the ‘events page’ on the IQE web-site contained NO onward events, this simply can’t be true- just adding details of investor roadshows, presentation that ARE occurring , would be positive, there are many more examples, that don’t involve issuing an RNS ,the KEY thing is that they got the message, certainly the incoming Chairman and all the board did, I actually expect some changes, we shall see. It’s irritating me already that the AGM presentation is not up on the web-site, that’s a small but glaring and consistent error that’s totally unacceptable!What is obvious, is that the fluctuations in SP is being largely and almost entirely driven by us - PI’s. The key engagements with institutional investors are taking place all the time and they seem intent on adding Whilst PI’s subtract and trade ( simplistic but probably true).Obviously shorter’s have an effect, but frankly I think it’s overstated.

The future market for VCSELS is indeed huge, however,the CEO was at pains to point out that our VCSEL revenue at present is almost entirely from 1 smartphone, of course that will change soon. I asked the question about VCSELS v EE ( edge emitting) lasers , as it seems some of the Android smartphones will have EE’s, in short, IQE confirm that they produce BOTH , but interestingly the CEO restated that VCSELS are the far better option and that he believed ( he should know) that in fact the majority of the Asian handset companies WILL be using VCSELS ,which will no doubt be more profitable for us.

Of course the massive markets for VCSELS come not only from wireless applications but from 2020 onwards from industrial and automotive applications. The autonomous car with its LIDAR systems has a huge demand in VCSELS - the MOST amazing fact learned at yesterday’s AGM is that, the the VCSEL constituent of a 2020 car could be so large that ONE SINGLE VCSEL WAFER would be needed to supply ONLY 16 cars! WOW , that’s perhaps why the new Newport factory has space for 100reactors , a 6inch VCSEL wafer probably costs £8000 quid now ( obviously will come down as volume production occurs)and can probably be used to make a few thousand phones , but only 16 vehicles- go work out the revenues.The CEO was again at pains to explain clearly why IQE’s VCSELS are the best, you either believe him or you don’t, I don’t care, the proof is in the pudding- the CUSTOMERS do ( read the RNS).He once again gave a detailed believable explanation of why this is the case.

Hammerd and others bought up the issue of the number of new reactors that have been placed and are on order. Hammerd , and others are unhappy that with the obvious future demand and the 6-12 month acquisition/ fitting/ validating time, should mean that more reactors should be on order.The CEO could not be shifted from IQE’s position of prudent acquisition to ensure full capacity as and when it is needed, rather than before, remember their customers and the market WILL be informing them,rather than spending now and the machines potentially sitting idle. It seems sensible to me , 2018 and 2019 will see a surge in demand but it looks like those extra 10-15 reactors in addition to existing infrastructure will probably suffice. The massive demand looks likely to come late 2019/2020onwards where if everything goes according to predictions it looks like that factory will be filling up, in the short to medium term VCSEL demand will be very large but dependent on Apple and on the Android camp getting its act in order. Having 10 redundant reactors , with 30people sitting on their ars$s doing nothing would not be good business?

I bought up the issue of the 2017 tax charge with the chairman, IQE in its 2017 RNS expresses disappointment with their previous professional advisors and indicated that they would be seeking recompense, no mention has been made since, hence my query. Obviously IQE can’t claim back the tax that was owed, what they can do is pursue the advisors for costs, interest and ‘harm’ done to reputation. Obviously any litigation is costly, sensitive and difficult as one of the advisors has been acquired, but Dr Ainsworth reassured me, that this matter is still very much on his radar and is being actively pursued.

As always, I like to look directors ‘in the eye’ and assess body language and tone, nothing that I saw yesterday persuades me other than we have a board of high integrity. All the board are determined that Phil’s legacy will be remembered and the foundations , mentoring and planning he helped institute will result in great rewards for its shareholders.On the corporate side We obviously need that new non-exec, that’s a given,but after hosting the delightful DPMeyer at our barn the night before( another boozy one), I am persuaded by him,( he himself is a non-exec Chairman) that we may need, especially if we move to the FTSE another senior board position, something to think about?

I didn’t go on the tour, I have seen the existing facilities and the new site externally many times, sheer numbers of investors prevented an internal tour, a pity as I was looking forward to that, that will hopefully be remedied sometime in July, I shall report back.

This is my 5th IQE AGM report,it’s instructive and important for me to state that at each meeting I have come away positively ( easier yesterday than when the SP was 17p!). Plans and aspirations set out 5 years ago have largely come true, opportunities are being converted to solid business and revenue generation,markets are opening up, and 5G awaits, acquisitions have largely been successful. With an unrivalled breadth of a technology portfolio and a route to a license and royalty stream, enabled by a vast array of patents, I am confident about the future, the key is, so is the board. :-)I can live with with the frustrating SP gyrations , but I would be incredulous if the SP is not significantly higher during 2018.....but I would say that.Nothing is certain.

I was disappointed that Apple didn’t introduce a new 3D sensing iPad Pro yesterday and would be disappointed if the Android camp don’t get a meaningful volume of high end 3D sensing/ facial recognition smartphones on the market in early 2019 ( hopefully at least a few for Xmas season), there are many imponderables, but as long as you don’t ‘bet’ what you can’t afford to lose you will be safe. My holding is definitely ‘locked away’

That’s me for the day, where is the aspirin ;-), one thing IS certain in life,attending AGM’s and the after event food and drinkies with Hammerd, should carry a government health warning ⚠️ :-)

Lovely to meet so many of you yesterday
Dave

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pka 13th Sep 434 of 449

"After Apple launched its new iPhone XS and XR range, there were positive implications for UK-listed semiconductor wafer maker IQE" according to analysts at Canaccord:

https://www.share.com/stock-markets-and-news/external-news?articleId=894646

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mmarkkj777 14th Sep 435 of 449
2

I held this share for a while last year, lost quite a bit before being stopped out. I made a mental post-it note and stuck it on my brain never to buy a share that was such a big favourite of the shorters.

I'm guessing that a lot of the shorters must have closed their positions by now? If not, its probably ripe for a squeeze. A bit risky though. I'd like to see real evidence that it has fresh momentum before going back in.

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donald pond 14th Sep 436 of 449
5

The issue with IQE (LON:IQE) as I see it is that too many people focus on the demand side of the equation and speculate about Apple in particular. The reality is that there is no shortage of demand for the wafers IQE produce. The problem is the supply side where the board have been fairly cautious in the number of machines they have deployed. They are working at reducing down time by moving productions between factories, so machines will not have to switch between photonics and wireless, but the real challenge for me is whether they can demand higher premiums and/or work their way up the value chain. Until that happens they are a little stuck with the volumes they can produce, and while that is growing, each machine procured reduces profit, which enables the shorters to cry manipulation, and a large PI base to be manipulated. Also, it just seems that every set of results there is something exceptional that stops profits being all that was hoped for: customers reducing inventory, extensive product development for major customer etc. I hold, for my sins!

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Taff6 16th Sep 437 of 449

"follow the madness of the crowds but be among the first to come to your senses"

IQE (LON:IQE) Monthly chart

came close enough to testing the .618 retracement off the June 2017 lows 

5b9ed7e4d187dIQE_1.JPG

IQE (LON:IQE) Daily chart 

2 X near perfect AB=CD patterns 

Low volume test of a high volume swing point low 

Gap from the 17 July 2017 closed 

Bullish One White Soldier reversal candle off the lows 

5b9edae6a5114IQE_2.JPG

Shorts reduced by approx 1% last week, however sorters must still be very confident as shorts still at 11.04% 

5b9edba6919abIQE_3.JPG

Decision time?

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nickwild 15th Oct 438 of 449

New CFO appointed - see RNS. Experienced, and currently ARM CFO. Share price up and hopefully H2 update in December will lead to re-rating.

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Ramridge 15th Oct 439 of 449
1

BTW does anyone know what has happened to Sweenoid, the IQE super bull and chief drum beater at Advfn? He hasn't posted for some months.

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doug2500 12th Nov 440 of 449
1

Ouch.

Nasty trading update / profit warning this afternoon. Especially in these jittery conditions.

Glad it's a very small position for me.

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tripuram 12th Nov 441 of 449
1

IQE (LON:IQE) - just came to know about it.. disappointing..

HARD LESSON TO ME: Don't keep holding the stock when there are significant shorts. Cannot fight with Mr Market - just know that others are not stupid :-(

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mrosbiston 13th Nov 442 of 449
1

minervini predicts don't fight/invest against a stage 4 trend

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mmarkkj777 13th Nov 443 of 449

In reply to post #418279

Hi Tripuram,

Don't be too hard on yourself. We have all been there (and probably will be again, maybe just different issues!).

I see IQE are up today. A bit of a spike just after the market opened before settling around 71/72p.
The spike may have been shorters closing their positions to take profit. Be interesting to see where the price goes from here.

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Bushranger 13th Nov 444 of 449

In reply to post #408774

Re Sweenoid. Someone thought they saw him outside a food bank looking dishevelled. Someone else thought they overheard him on a 5* Spanish beach resort talking about the suckers that bought his shares at 180p. The truth is probably between the two.

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pka 3rd Dec 445 of 449
5

In reply to post #418464

Sweenoid (whose real name is Dave Sweeney and whom Ramridge calls 'the IQE super bull and chief drum beater at Advfn') posted about IQE on ADVFN today (3rd December 2018) for the first time for many months, in what he wrote will be his last post anywhere. I've copied it below, in case any Stockopedia readers are interested in Sweenoid's latest views on IQE. Although his posts have invariably been bullish about IQE's share price, he has a very good understanding and knowledge of its business, technologies and markets.


"The only reason for me posting today is to pay a debt and to fulfil an obligation. I decided to stop posting here or anywhere else in late July after my Newport factory report,todays post will definitely be the last ...anywhere. I could give the reasons, but I won’t, other than to say my life is more fulfilling and calmer , not visiting this or indeed any other social networking site,this post will be positive and upbeat, not negative and insulting. I am proud of my contribution here.

Firstly, let me remind you, that many moons ago I challenged Sheepherder to a bet, related to the IQE SP at end of trading on 31st of December, I bet it would be 150p plus, he said it wouldn’t, fair dinkum, Sheepy rose to the challenge. The loser would pay £250 to the charity of choice of the winner. Well, no prizes for working out that I end up with egg on my face. I guess if you have to lose , it might as well be a comical loss...which it is and obviously will be. I can assure readers, that my wife has made a huge ‘humble pie’ and I will be eating it daily, to pay for my hubris.

Good news is that Cancer Research UK gets £250, with gift aid that’s £300. Since I lost this bet so badly and to balance things out, I have made another similar donation, I decided not to make it to my original charity choice, rather it has gone to ‘Crisis’ appeal for the homeless , which seems apposite at this time of year. As part of the bet, the loser- me, had to provide proof of the donation, here it is :-)

THANK YOU, DAVID
Today, your donation of £250.00 made a difference.

YOUR DONATION DETAILS
Donation amount: £250.00
Donation reference number: $$$$$$$$- blanked by me for privacy reasons.
GIFT AID

Thank you for agreeing to allow each and every one of your gifts made to Cancer Research UK to be treated as Gift Aid donations.


I was going to sign off there, but decided to ‘scribble’ a few thoughts down, for the very last time, for anyone remotely interested. I should probably add that my IQE holding remains entirely intact after my 10% sell at a rather higher SP some time ago, in fact, given a ‘sale’ on the share price has occurred , I took the opportunity to make substantial buys at 58p and 60p , what a bargain , come now let alone next August! :-),therefore my holding is even more ridiculously large than it was before, so thanks for that :-).

This post is bullish, some may consider it a ramp, if so I really don’t care! If you are of an indelicate bearish constitution, or can’t bare my analysis , then stop reading now, no doubt ‘some’ will carry on reading, if for no other reason to rubbish me ;-).....there’s the rub for trying to report news/ information and attempting as best as I can to analyse it.

All imho and dyor

1st - my thoughts on the recent ‘2’ trading statements. I was actually livid with rage after reading the 1st- issued at 4.20pm, short on facts, it appeared unconsidered and rushed. I did not see it till 10pm as along with not looking at bb’s, I only check the SP a few times a week these days- why bother when I won’t be selling till it gets to 150p plus, I do however continue my research on the technologies, the markets we are involved with and our customers. I was however very satisfied with the following days, qualified, considered and actually very positive and factual RNS. I demanded an explanation as to why the 1st RNS had to be issued so late in the day, I was not happy with Chris Meadows initial responses, and pushed and pushed. It transpires that the board were More or less ‘forced’ / ‘obliged’ to issue that RNS, by their NOMAD, ( IQE didn’t say that- its my interpretation)to conform with so called ‘regulatory rules’. Quite frankly, I believe the notion that a company is seemingly compelled to release such a damning but factually vacuous statement, when a more ‘informed’ response could be made, effectively 10 minutes later ( those 10 minutes cost some of us,many tens of thousands of £ :-() is beyond belief,and I let the chairman and Chris know my view. I actually believe the company share my belief but can’t say so, the evening of the 1st trading statement was occupied by communication between every single board member and that resulted in what I believe is as good a statement as we could expect the following day, given our customers ( AMS and Lumentum) contemporary comments. The ‘lull’ in the VCSEL supply chain is related to Apple alone and has nothing to do with problems at IQE , something commentators fail to mention.

2019 is going to be the year that I have dreamed about for this stock, discounting macroeconomic ‘shocks’ everything IQE has been working toward will start to fall in place and many will produce very relevant revenue streams.

My enthusiasm is increased by the imminent board changes, By the end of Q1 2019, IQE will have the ex CFO of ARM and the ex CEO of Cisco at the helm, to aid and abet the CEO.Phil Smith the new executive chairman is a dynamic individual with a huge industry wide reputation, I know from meeting him twice and by individual communication he is truly ‘up for the challenge’, I am totally confident that with him and Tim Pullen the new CFO as frontmen we will see a radical new stance to how the company represents it. The late CFO, Phil Rasmussen was a wonderful communicator but was woefully ( imho) underused to promote the company, I expect Tim Pullen to have a much higher profile with both public and institutional investors. We need 1 more new non- exec, I am expecting someone of stature. I salute Godfrey Ainsworth for his long standing efforts as chairman and doing sterling work as interim CFO as well as being executive chairman,post Phil’s untimely death, I am aware of the personal and business sacrifices he has made to steady the ship- thanks.

VCSELS

We have seen nothing yet in terms of the volume of VCSELS that will be needed going forward. Apple kicked it off ,but 2019 will see the limited ( as yet) use of 3D sensing and Face ID explode in the Android market, but come mid-point of next year the really BIG move will come with world-facing applications ( needing significantly higher numbers of VCSELS) . Innovation in smartphones has almost ground to a halt over the last 4 years, ok the CPU and GPU perform better, faster, more pixels etc and screen technology has advanced ,but essentially it’s more of the same...repeatedly. ALL the companies know that Augmented reality -AR WILL be the ‘killer’ application that drives demand, and provides the much needed innovation ,this functionality totally depends on world facing VCSEL technology. Of course the next major itineration of smartphones will also have to be 5G enabled - yum yum for IQE , as that depends on Compound Semiconductors too, more on that later.

Of course the wireless market will within a few years actually be outpaced in terms of VCSEL demand by automotive and industrial applications. IQE at interims said they had more than 20 customers/ partners for VCSELS , the trading statement a few months later swells that number to more than 25- jolly spotto! :-), if you research the VCSEL module manufacturers it would appear IQE are working with literally the entire supply chain, only the biggest companies dual- source , go work it out.

Don’t forget about Seagate HAMR ( heat assisted magnetic recording) , which uses VCSEL lasers, to generate the heat.Seagate are already producing 16TB HAMR storage disc drives and within 12 months the 1st commercial high volume 20TB HAMR drives will be in big volume production. 48TB drives by 2023?! Hyperscale customers, with relentlessly increasing storage demands will be big consumers. Those same hyperscale guys, the so called FAANG and BAT companies will also of course be massive consumers of our customers indium phosphide and gallium arsenide components mainly in their data centres.

hTtps://www.theregister.co.uk/2018/11/02/seagate_hamr_roadmap/

Competition

There has and always will be competition over all of IQE’s wafer divisions. Bears will quote any new start up who buy a reactor from Aixtron as a competitor- get real. There will be only a maximum of 3 real competitors in each division, for outsourced wafers. I am talking about companies that can produce quality, high volume, high yield wafers in multiple locations ( Big OEM’s demand multiple location producers, to eliminate geopolitical calamities). The biggest competition for IQE IMHO comes from 11-V1 and Finisar , it was music to my years to hear that the former has bid for the later :-) takeovers distract management and create uncertainty within workforce’s and of course customers and potential customers , this has to be advantageous to IQE- go THINK on why. Competition is healthy but they are way behind , for reasons I have repeatedly stated in the past and still apply today, that’s why in the recent update,IQE were at pains to state that they fully expect to retain 90% of the outsourced VCSEL market during 2019- the year it really takes off, a very confident statement and given they will have good visibility ,very positive indeed.The competition is way behind us, and will be for some years to come, since acquisition and retention of customers is ‘sticky’IQE’s 1st mover advantages with a multiplicity of clients many of whom are already qualifying their products on IQE wafers AND reactors. I will repeat once again the validation and qualification process required for a module/ component in the compound Semiconductors business takes at least 6 months, once ‘employed’you have to really ‘suck’ to lose the gig! IQE have a solid gold reputation...and I don’t expect them to f**k up anytime soon.

GAN on Silicon

I have been banging on about the potential revenues here for years . Well at last it is starting to flow, acknowledgment in the trading statement. Initially with RF GAN and then with Power, I would draw your attention to the recent Macom ( our main partner here, whose CEO acknowledges the crucial part that IQE play in their supply chain) conference call

hTtps://seekingalpha.com/article/4222356-macom-technology-solutions-holdings-inc-mtsi-ceo-john-croteau-q4-2018-results-earnings-call

Amongst many very very positive comments these 2 stand out

‘It's actually quite shocking when you see the unit volumes and the wafer consumption requirements. ‘!!!!

‘We're talking 3 times greater demand in 5G than the previous 4G LTE cycle. We therefore believe that the billion-dollar RF power market is poised to triple over the next few years on the back of GaN in 5G base stations.’

Remember GAN goes from zero to hero in terms of revenues, by the end of 2019, I believe they will be substantial, now that ‘gravy train’ has started. Macom are doing a presentation tonight at 8pm our time, webcast live, I am hoping their positivity on the GAN business will be restated- it’s webcast live, details on their website.

Filters

Another of my hobby horses- mainly because IQE has been teasing us with the potential for massive earnings for some time, especially at AGM’s. Well 1 year ago IQE had ‘cracked’ the technology issues about developing a single layer of Al Nitride into a wafer, overcoming the need for the spluttering process necessary for production of these filters. We know that IQE are working with multiple customers, and have had prototypes available for some time. With 5G imminent, new filter technologies are called for , and IQE are at last positioned to break into this hugely lucrative market. Have a read of the Skyworks CEO’s comments in their last conference call, major announcements will be made this year on new technologies and I expect them to feature our AlNitride wafers- we shall see.

Comparators

H1 2018 was hit by a significant £v$ headwind and also inventory issues and the comparison with the previous years license fee wins

Paradoxically H1 2019,will almost certainly have a significant currency tailwind and rapidly ramping revenues from a diverse range of VCSEL customers, aided and abetted by revenue ramping up from GAN and a strong infrared performance , as well as a creditable performance from the PA wireless business.H1 2019 and indeed the full year is looking very sweet to me.

I consider the forecast figures in the trading statement to be the worse case scenario, and believe they are now fully factored into the SP.

As for infrastructure, all is in place, the new reactors are coming on stream at Newport and Taiwan is expanding in terms of our wireless products.The US operation is consolidating by closing New Jersey, saving $$ and expanding in other sites.

I see a very positive and lucrative future for IQE

I wish you all a happy Xmas, a prosperous new year, but more importantly good health and happiness. I will meet some of you at the next AGM , I look forward to that, but I will never post here again, I will leave with a comment I have made here on a number of occasions, if followed, it would improve the quality here no end?

Don’t speak ( post) if you can’t improve on the silence. ;-)

goodbye
Dave"

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Ramridge Wed 9:17am 446 of 449
3

In reply to post #424093

pka - re. IQE (LON:IQE) Thanks for copying Sweenoid's 'final goodbye' post.
There is no denying that the chap has a very deep knowledge of this sector of the digital technology, IQE's strengths, the market and its competitors.

My biggest problem throughout has been to judge whether his super bullishness about IQE was genuine, almost to the point of being messianic, or he was simply talking up his considerable stake in the company, and doing a really good job of it.

After reading his 'goodbye' post, I am still not convinced either way. The truth may lie somewhere in between.

However it is results that matter. On that score I have to thank him. Throughout 2017, I traded the share, ducking in and out, and ended up some 80% up by the end of December.

On balance I wish him well. He has made a lot of money and no doubt many of his followers have hugely benefited too.

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Graham Ford Wed 9:52am 447 of 449
3

In reply to post #424748

Hi Ram

I read it that other than top slicing a bit with IQE (LON:IQE) Dave Sweeney was saying that he is still invested so presumably, if that is true, has not made a fortune on the company so far.

I agree with you that he has always been very bullish, but he has always backed up his views with a great deal of in depth analysis. When you compare the depth of his analysis to that of the various columnists who have reported on the company he does seem to have gone into more depth (albeit he missed some things - don’t we all).

If he went wrong, it was probably, in my view, in not thinking about what might go wrong with this company, such as a temporary over reliance on Apple, and focusing solely on what could go right. But he was not alone in that.

So, while he may have been talking up the price of one of his major holdings, to me as it was always backed up by good supporting arguments it was fair comment and I think he was completely genuine.

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pka Wed 9:05pm 448 of 449

In reply to post #424778

Hi Graham,

Actually I think Dave Sweeney has made a fortune on IQE so far, albeit on paper, because his average purchase price was well below the current share price and he has a very large shareholding.

I don't think anything has gone wrong with IQE's business, it's just that it has high capital expenditures in new manufacturing equipment, in order to cater for the rapidly growing demand for its compound semiconductor epi-wafer products for a variety of applications, which reduces its cash flow and profits in the short term, but will hopefully pay off in the longer term. I think the fact that IQE doesn't pay a dividend makes its shares particularly volatile. I would prefer it if the chief executive relied on dividends from his large shareholding rather than on share options to incentivise him.

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Graham Ford Thu 8:32am 449 of 449
1

In reply to post #425053

Hi pka

I take your point. Indeed DS did buy in a long time ago so is probably still making substantial gains.

I agree about directors’ remuneration being poorly crafted. The performance hurdles that need to be achieved for the LTIP to pay out share options are far too low. Especially when this is on top of their bonus scheme.

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