IQE Plc...This presenta5on has been prepared by and issued by, and is the sole responsibility of,...
Transcript of IQE Plc...This presenta5on has been prepared by and issued by, and is the sole responsibility of,...
EnablingAdvancedTechnologies
IQEPlcIntroduc8ontoIQENovember2017
EnablingAdvancedTechnologies
Disclaimer
THISPRESENTATIONANDITSCONTENTSARECONFIDENTIALANDARENOTFORRELEASE,PUBLICATIONORDISTRIBUTION,INWHOLEORINPART,DIRECTLYORINDIRECTLY,INORINTOORFROMTHEUNITEDSTATESOFAMERICA,CANADA,AUSTRALIA,JAPANORANYJURISDICTIONWHERESUCHDISTRIBUTIONISUNLAWFUL.Thispresenta5onhasbeenpreparedbyandissuedby,andisthesoleresponsibilityof,IQEplc(the"Company")solelyforinforma5onandforuseatapilotfishingpresenta5oninconnec5onwithapoten5alofferingofordinarysharesinthecapitaloftheCompany(the"Offer").Forthepurposesofthisno5ce,"presenta5on"meansthisdocument,anyoralpresenta5on,anyques5onandanswersessionandanywriHenororalmaterialdiscussedordistributedduringthepilotfishingpresenta5onmee5ng.Thispresenta5onmaynotbecopied,distributed,reproducedorpassedon,directlyorindirectly,inwholeorinpart,ordisclosedbyanyrecipient,toanyotherperson(whetherwithinoroutsidesuchperson'sorganisa5onorfirm)orpublishedinwholeorinpart,foranypurposeorunderanycircumstances.Thepresenta5onhasnotbeenindependentlyverifiedandnorepresenta5onorwarranty,expressorimplied,ismadeorgivenbyoronbehalfoftheCompanyand/oranyofCanaccordGenuityLimitedandS5felNicolausEuropeLimited(together,the"Banks")oranyoftheirrespec5veparentorsubsidiaryundertakings,orthesubsidiaryundertakingsofanysuchparentundertakings,oranyofsuchperson'srespec5vedirectors,officers,employees,agents,affiliatesoradvisers(collec5vely,"Representa5ves"),asto,andnorelianceshouldbeplacedon,theaccuracy,completenessorfairnessoftheinforma5onoropinionscontainedinthispresenta5onandnoresponsibilityorliabilityisassumedbyanysuchpersonsnorisanyrepresenta5on,warrantyorundertaking,expressorimplied,madeorgivenbyanysuchpersonforanysuchinforma5onoropinionsorforanyerrorsoromissions.Anyliabilityorresponsibilityforsuchinforma5onandopinionsis,tothemaximumextentpermiHedbylaw,expresslydisclaimedwhetherarisingintort,contractorotherwise.Allinforma5onpresentedorcontainedinthispresenta5onissubjecttoverifica5on,correc5on,comple5onandchangewithoutno5ce.Ingivingthispresenta5on,noneoftheCompany,oranyoftheBanksoranyoftheirrespec5veRepresenta5ves,undertakesanyobliga5ontoamend,correctorupdatethispresenta5onortoprovidetherecipientwithaccesstoanyaddi5onalinforma5onthatmayariseinconnec5onwithit.Thispresenta5ondoesnotformthebasisofanycontractanddoesnotcons5tuteorformpartof,andshouldnotbeconstruedas,anyoffer,invita5onorrecommenda5ontopurchase,sellorsubscribeforanysecuri5esinanyjurisdic5onandneithertheissueoftheinforma5onnoranythingcontainedhereinshallformthebasisoforberelieduponinconnec5onwith,oractasaninducementtoenterinto,anyinvestmentac5vity.Thispresenta5ondoesnotpurporttocontainalloftheinforma5onthatmayberequiredtoevaluateanyinvestmentintheCompanyoranyofitssecuri5esandshouldnotbereliedupontoformthebasisof,orbereliedoninconnec5onwith,anycontractorcommitmentorinvestmentdecisionwhatsoever.Thispresenta5onisintendedtopresentbackgroundinforma5onontheCompany,itsbusinessandtheindustryinwhichitoperatesandisnotintendedtoprovidecompletedisclosureuponwhichaninvestmentdecisioncouldbemade.Neitherreceiptofthepresenta5onbyanyperson,noranyinforma5oncontainedinit,suppliedwithitorsubsequentlycommunicatedtoanypersonby,oronbehalfof,theCompany,orbytheBanksoranyoftheirrespec5veRepresenta5veseithercons5tutes,oristobetakentocons5tute,thegivingofinvestmentadvicebytheCompany,theBanksortheirrespec5veRepresenta5ves.ThemeritandsuitabilityofaninvestmentintheCompanyshouldbeindependentlyevaluatedandanypersonconsideringsuchaninvestmentintheCompanyisadvisedtoobtainindependentadviceastothelegal,tax,accoun5ng,financial,creditandotherrelatedadvicepriortomakinganinvestment.Totheextentavailable,theindustryandmarketdatacontainedinthispresenta5onhascomefromofficialorthirdpartysources.Thirdpartyindustrypublica5ons,studiesandsurveysgenerallystatethatthedatacontainedthereinhavebeenobtainedfromsourcesbelievedtobereliable,butthatthereisnoguaranteeoftheaccuracyorcompletenessofsuchdata.WhiletheCompanybelievesthateachofthesepublica5ons,studiesandsurveyshasbeenpreparedbyareputablesource,theCompanyhasnotindependentlyverifiedthedatacontainedtherein.Inaddi5on,certainoftheindustryandmarketdatacontainedinthispresenta5oncomefromtheCompany'sowninternalresearchandes5matesbasedontheknowledgeandexperienceoftheCompany'smanagementinthemarketinwhichtheCompanyoperates.WhiletheCompanybelievesthatsuchresearchandes5matesarereasonableandreliable,they,andtheirunderlyingmethodologyandassump5ons,havenotbeenverifiedbyanyindependentsourceforaccuracyorcompletenessandaresubjecttochangewithoutno5ce.Accordingly,nounduerelianceshouldbeplacedonanyoftheindustryormarketdatacontainedinthispresenta5on.Thispresenta5onisanadver5sementforthepurposesoftheUnitedKingdomProspectusRulesandnotaprospectus.Thispresenta5onis,andtheOfferifandwhenmadewillbe,onlyaddressedtoanddirectedatpersonsinmemberstatesoftheEuropeanEconomicArea("EEA")whoarequalifiedinvestorswithinthemeaningofAr5cle2(1)(e)oftheProspectusDirec5ve(Direc5ve2003/71/EC)("QualifiedInvestors").Inaddi5on,intheUnitedKingdom,thispresenta5onisaddressedtoanddirectedonlyat,QualifiedInvestorswho(i)arepersonswhohaveprofessionalexperienceinmaHersrela5ngtoinvestmentsfallingwithinAr5cle19(5)oftheFinancialServicesandMarketsAct2000(FinancialPromo5on)Order2005,asamended(the"Order"),(ii)arepersonswhoarehighnetworthen55esfallingwithinAr5cle49(2)(a)to(d)oftheOrder,or(iii)areotherpersonstowhomthispresenta5onmayotherwiselawfullybecommunicated(allsuchpersonstogetherbeingreferredtoas"relevantpersons").Thispresenta5onmustnotbeactedonorreliedon(i)intheUnitedKingdom,bypersonswhoarenotrelevantpersons,and(ii)inanymemberstateoftheEEAotherthantheUnitedKingdom,bypersonswhoarenotQualifiedInvestors.Anyinvestmentorinvestmentac5vitytowhichthispresenta5onrelatesisavailableonlytorelevantpersonsintheUnitedKingdomandQualifiedInvestorsinanymemberstateoftheEEAotherthantheUnitedKingdom,andwillbeengagedinonlywithsuchpersons.Thispresenta5onandtheinforma5oncontainedhereinisnotintendedforpublica5onordistribu5onin,anddoesnotcons5tuteanofferofsecuri5esin,theUnitedStatesortoanyU.S.person(asdefinedinRegula5onSundertheU.S.Securi5esActof1933(the"Securi5esAct"),asamended,Canada,Australia,Japanoranyotherjurisdic5onwheresuchdistribu5onorofferisunlawful.TheCompanyhasnotregisteredanddoesnotintendtoregistertheofferingintheUnitedStatesortoconductapublicofferingofanysecuri5esintheUnitedStates.Securi5esmaynotbeofferedorsoldwithintheUnitedStateswithoutregistra5on,exceptpursuanttoanexemp5onfrom,orinatransac5onnotsubjectto,theregistra5onrequirementsoftheSecuri5esAct.Subjecttocertainlimitedexcep5ons,neitherthispresenta5onnoranycopyofitmaybetaken,transmiHedordistributed,directlyorindirectly,intotheUnitedStates,itsterritoriesorpossessions.Anyfailuretocomplywiththeforegoingrestric5onsmaycons5tuteaviola5onofU.S.securi5eslaws.Thispresenta5onincludesforward-lookingstatementswhichspeakonlyasofthedatetheyaremade.Thewords"expect","an5cipate","intend","plan","es5mate","aim","forecast","project"andsimilarexpressions(ortheirnega5ve)iden5fycertainoftheseforward-lookingstatements.Theseforward-lookingstatementsarestatementsregardingtheCompany'sinten5ons,beliefsorcurrentexpecta5onsconcerning,amongotherthings,theCompany'sresultsofopera5ons,financialcondi5on,liquidity,prospects,growth,strategiesandtheindustryinwhichtheCompanyoperates.Theforward-lookingstatementsinthispresenta5onarebasedonnumerousassump5onsregardingtheCompany’spresentandfuturebusinessstrategiesandtheenvironmentinwhichtheCompanywilloperateinthefuture.Forward-lookingstatementsinvolveinherentknownandunknownrisks,uncertain5esandcon5ngenciesbecausetheyrelatetoeventsanddependoncircumstancesthatmayormaynotoccurinthefutureandmaycausetheactualresults,performanceorachievementsoftheCompanytobemateriallydifferentfromthoseexpressedorimpliedbysuchforward-lookingstatements.Manyoftheserisksanduncertain5esrelatetofactorsthatarebeyondtheCompany'sabilitytocontrolores5mateprecisely,suchasfuturemarketcondi5ons,currencyfluctua5ons,thebehaviourofothermarketpar5cipants,theac5onsofregulatorsandotherfactorssuchastheCompany'sabilitytocon5nuetoobtainfinancingtomeetitsliquidityneeds,changesinthepoli5cal,socialandregulatoryframeworkinwhichtheCompanyoperatesorineconomicortechnologicaltrendsorcondi5ons.Pastperformanceshouldnotbetakenasanindica5onorguaranteeoffutureresults,andnorepresenta5onorwarranty,expressorimplied,ismaderegardingfutureperformance.TheCompanyandeachoftheBanksexpresslydisclaimsanyobliga5onorundertakingtoreleaseanyupdatesorrevisionstotheseforward-lookingstatementstoreflectanychangeintheCompany'sexpecta5onswithregardtheretooranychangeinevents,condi5onsorcircumstancesonwhichanystatementisbasedagerthedateofthispresenta5onortoupdateortokeepcurrentanyotherinforma5oncontainedinthispresenta5on.Accordingly,nounduerelianceshouldbeplacedontheforward-lookingstatements,whichspeakonlyasofthedateofthispresenta5on.EachoftheBanks,whichareeachauthorisedandregulatedbytheUKFinancialConductAuthority,isac5ngexclusivelyfortheCompanyandnooneelseinconnec5onwiththeOffer.NeitheroftheBankswillregardanyotherperson(whetherornotarecipientofthispresenta5on)asaclientinrela5ontotheOfferandwillnotberesponsibletoanyoneotherthantheCompanyforprovidingtheprotec5onsaffordedtotheirrespec5veclientsnorforthegivingofadviceinrela5ontotheOfferoranytransac5on,maHerorarrangementreferredtointhispresenta5on.ByaHendingthemee5ngwherethispresenta5onismadeorbyaccep5ngacopyofthispresenta5on,anyrecipientofthispresenta5onagreestobeboundbytheforegoinglimita5onsandtomaintainabsoluteconfiden5alityregardingtheinforma5ondisclosedinthispresenta5on.
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EnablingAdvancedTechnologies
Anintroduc5ontoCompoundSemiconductorTechnology
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EnablingAdvancedTechnologies
Referencepoint:siliconchipsupplychains
SiliconWafer(Semiconduc5ngmaterial)
ChipFabrica8on(PaHerning,Etching,metalisa5on,
packaging)
Device(egsmartphone)
Chips
But,siliconisnottheonlysemiconductor…
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EnablingAdvancedTechnologies
Compoundsemichips
Siliconchips
Compoundsemiconductorsupplychains
Wafer Chip Device
Wemakeadvancedwafers
Whichourcustomers
usetomakehigh-
performancechips
Combiningarangeofsemiconduc8ngelements…
…thathavemoreadvancedproper8esthansilicon
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EnablingAdvancedTechnologies
Howwemakecompoundsemiconductorwafers…
Epitaxy – engineering advanced materials • Atomically engineered films • Crystal growth technology • Bespoke to each application • Customer qualification requirements • Barriers to entry
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EnablingAdvancedTechnologies
ThemarketsforCompoundSemiconductors
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EnablingAdvancedTechnologies
Evolu8onofsemiconductortechnology
Internet
Mar
ket s
ize
SourceIQE:nottoscale
Forillustra3on
§ Single element– basic properties
§ Growth has been driven by miniaturisation (Moore’s Law) and scale
§ Diminishing returns § Basic performance
Ultra Low Cost
§ Multiple elements– engineer advanced properties
§ High performance- wireless, light, power, speed
§ High performance Higher Cost
Hybrid Technology : “CS on Si” § High Performance of CS
Low cost of Si
SILICON WAFER CS SUBSTRATE
EPI FILMS
SILICON WAFER
EPI FILMS
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EnablingAdvancedTechnologies
TheCSindustry:mul8plegrowthdrivers
Healthcare,Robo8cs&AutonomoussystemsHeathcare,medicaldiagnos5cs&treatmentRobo5csSelfdrivevehiclesMachineawarenessAdvancedSensorTechnology
Communica8ons&BigdataMobileandinfrastructure
DatastorageInternetofThings
Wearables&TeleHealthcareSensingandbiophotonics
EnergyefficiencyCleanenergy(CPVsolar)SolidStateLigh5ng(LED)
PowerswitchingBaseSta5ons
FactoriesoftheFuture
DefenseandAerospaceSatellitepowerCommunica5onsUAVsInfraRedImagingFoodSecurity
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EnablingAdvancedTechnologies
-15
-10
-5
0
5
10
15
20
25
30
35
0
20
40
60
80
100
120
140
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Diversifica8on
Theevolu8onofIQE:gearedtogrowthacrossmul8plemarketsSales£’m EBITDA£’m
SALES&EBITDA*
BuildingthePla]orm
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*EBITDAhas been calculatedas earnings before : non-controlling interest, tax, share basedpayments, finance costs, deprecia3onof tangible fixedassets, amor3sa3onof intangible fixedassets, loss/(profit) on
disposaloffixedassets,impairmentofassets,gainonreleaseofcon3ngentdeferredconsidera3on,andrestructuringandre-organisa3oncosts..
EnablingAdvancedTechnologies
EnabledbyIQE’sbroadIPpor]olio
• BroadpormolioofcompoundsemiconductormaterialsIP
• Tradesecretsandpatents
• Long-termcollabora5onwithUniversi5esandBlue-chips
• IPenvironmentfragmented,IQEcompeteswithdifferentplayersineachmarket
• BreadthofIQE’sIPisdifferen5ator
• BusinessunitsreflectIQE’smarketfocus
InP
GaAs
cREOTMIII-VonSi
RFGaN
GaNPower
SbIR
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EnablingAdvancedTechnologies
Newfoundry–the“Cardiffcitydeal”• CardiffCityDealtofundinfrastructureofnewfoundry
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• 11yearlease• 3yearrentfree• Op5ontopurchase(uptocirca£40m)• Partoftheexpanding(>£300M)CScluster
• IQEtofundtools• First5toolsonorder• Capacityforupto100newtools
EnablingAdvancedTechnologies
IQE’soutlook–itsmarketengagement
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EnablingAdvancedTechnologies 14
A3to5yearview–targetgrowthrates(IQEMANAGEMENTESTIMATES)
2018
2019
2020
2021
2022
RFFilter
PowerAmplifiers RFFiltersBasesta8ons
IndustryTargetCAGR 10-20% 20-30% 30-50%
3DSensing
FibreOp8cs
Augmentedreality
LIDAR
60-80%
Industrial
FTTX(DFB/NIL)
DWDM(NIL)
30-50% 50-80%Es5matedMarketby2022($m)*
$500m
$250m
$1000m
$800m
$400m
$150m
MachineVision
Industrialhea5ng
Datacentres
HandsetfrontEndfilters
Basesta5ons
5GRadar
Wirelesscharging/microwave
*Thesearemanagementcalcula0onsarebasedonthird-partysources,whichareinevitablysubjecttoanumberofuncertain0es.
EnablingAdvancedTechnologies 15
Charging
A3to5yearview–targetgrowthrates(IQEMANAGEMENTESTIMATES)
2018
2019
2020
2021
2022
Automo8ve Space
Terrestrial
30-50% 40-60% 40-60%
$50m
$100m
$150m
Defence Consumer
15-20%$125m
$100m
30-50% 10-15%
$250m
Industrial Consumer
10-15%
$50m
Inverters
DataCentres
AdvancedBiometrics
ConcentratedPhotoVoltaics
CPV
LargeSatellites
LEOConstella5ons
ElectricVehicles
WearableHealthMonitoring
NightVision
Military
Environmental
HALE
IndustryTargetCAGREs5matedMarketby2022($m)*
*Thesearemanagementcalcula0onsarebasedonthird-partysources,whichareinevitablysubjecttoanumberofuncertain0es.
EnablingAdvancedTechnologies
Acloserlookatnear-termdriversToaccelerategrowth
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EnablingAdvancedTechnologies
Neartermdriverstoaccelerategrowth:VCSEL:anewerainlowcostlasertechnology
VCSEL’sarehighperformancelowcostlasersfor:• Sensing• Communica8ons• Consumer• Industrial
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EnablingAdvancedTechnologies
VCSEL epiwafer
VCSEL chip
Magnetic storage Printing
Data centres
Cosmetic
3D Sensing
Industrial Heating
VCSEL–theapplica8ons
LIDAR
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EnablingAdvancedTechnologies
DFB-fullservicewafersforFTTX
• DFBLaser=DistributedFeedBackLaser• Cri5calforfibreop5ccommunica5ons
• Fibretothepremises(FTTX)• DataCentre• Corenetwork
• DFBwafers:Base+gra5ng+overgrowth• IQEhistoricallyprovidedBaseepionly• Wehavedevelopedapoten5allydisrup5vetechnologyforgra5ng-NanoImprintLithography(NIL)
• Mul5plequalifica5onsfor“fullservice”wafers
Gra8ng–viewedbyScanningElectronMicroscope
XX X X X X X X X X X X X X X X X XXX XX XXX X XXX
Overgrowth
Gra8ng
Base
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EnablingAdvancedTechnologies
GaNforRFApplica8ons
• GalliumNitride(GaN)hasmul5pleuseacrossRFapplica5on
• IQEoffersmaterialstechnologiescoveringbothGaNonSiliconCarbide(SiC)andGaNonSilicon
• Engagedwithmajorindustryplayers
RFEnergy
BaseSta8ons
Military Radar
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EnablingAdvancedTechnologies
Acloserlookatmid-termdriversToaccelerategrowth
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EnablingAdvancedTechnologies
Midtermdriverstoaccelerategrowth:Wirelessfilters(cREO)
$0.0b
$2.5b
$5.0b
$7.5b
$10.0b
$12.5b
$15.0b
2013 2014 2015 2016 2017
Mobile Device RF TAM
~15% CAGR
FilterContent $0.25 $1.25 $4.00 $7.25
Switching/Tuning $0.00 $0.25 $1.50 $2.25
PowerAmplifiers $0.30 $1.25 $2.00 $3.25
Other $0.00 $0.00 $0.50 $0.50
TotalRFcontent $0.55 $2.75 $8.00 $13.25+
Typical2G
Typical3G
RegionalLTE
GlobalLTE
Poten8alroutestoaccessusingcREOTM
technology
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Source:Qorvo(RFMD/TriQuint),2015
EnablingAdvancedTechnologies
Markets&industrychallengesfornextgenera8onwireless
Parameter Limiter Reason IQEPoten8alSolu8on
IQECapability
PowerAdded
Efficiency(PAE)
Offsetvoltage
Fundamentaltocurrentmaterials
solu8ons
Alternatecollector
Dilutenitridebase
Frequency
PACutofffrequency
FundamentallimitofGaAsHBT
InP-basedHBT
GaAs-basedPHEMT
FilterFrequency
Fundamentalrequirementforthinpiezo-electric
layers
Novelepi-solu8on(AlN)
DeviceSize ChipSize Fundamentallimitoffeaturesize
Novelintegrateddevicestack
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Es5m
ated
marketvalue
Source:MACOM/IQE
EnablingAdvancedTechnologies
CompoundsemiconductorsforPower,RFandLigh8ng
10 100 1K 10K 100K 1M 10M10
100
1K
10K
100K
1M
10MSiC
GaN
Silicon
Opera5ngfrequency(Hz)
Outpu
tPow
er(V
A)
HighSpeed
HighPowerPowerinverters
EV/HEV
MicroInvertersPC(DC-DC)
DataCentre
PowerInverters
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Source:IQEes3mates
EnablingAdvancedTechnologies
Poten8alapplica8onsforIQESolarTechnology
• Highefficiencysolarcells
• 44%efficiency(Silicon~18%)
• PowerGenera8onMarkets• Satellites• LEOs• Drones• Terrestrial
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EnablingAdvancedTechnologies
MassmarketofadvancedInfraredThe Infrared (IR) business unit specialises in the manufacture of compound
semiconductor substrates and epitaxial wafers that are used in longer wavelength Infrared imaging, sensing and emitter product applications
Medical DefenseSecurity Environmental
Non Invasive Glucose Monitoring
Border Control Infrared Homing/Seeking
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EnablingAdvancedTechnologies
longer-termgrowthdrivers
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EnablingAdvancedTechnologies
Longertermdriverstoaccelerategrowth:Poten8aladop8onofhybridCS-on-Siacrossmul8plemarkets
• Foundedin1988IQEhasalmost30yearsexperienceinsemiconductorsmaterialstechnology
• IQE’sIPpormoliocoversmul5plematerialssystems
• IQE’sexper5sedirectedtowardscombiningcompoundsemiconductorwithsilicontodeliverhighperformancechipsatlowcost
• crystallineRareEarthOxide(cREO™)providesanoveltechnologybase
• Transi5ontocREO™expectedtohappenapplica5onbyapplica5onoverthecomingyears,increasingIQE’saddressablemarkets
EpitaxiallayerscREO™interfacelayer
Epitaxiallayers
cREO™Approach
StandardIII-Vepi
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EnablingAdvancedTechnologies
Summary
• TheCSIndustryismovingthroughanInflec5onPoint
• IQEhasgeareditsstrategyandevolu5ontocapturethisopportunity• AttheheartofitsstrategyIQE’sIPpormolioisakeydifferen5ator• Thisissupportedbyaflexibleandcosteffec5veroutetoscalingthebusiness• ThishastranslatedintomarketleadershipforIQE,withasoundbasecaseforcon5nuinggrowth
• However,thebreadthanddepthofIQE’sengagementinabroadrangeofnear,midandlongtermopportuni5esprovidestrongupsidetothebasecase
• ThestartoftheVCSELrampinJune2017providesakeymilestoneonthisjourney
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