IQE to close Singapore site as part of consolidation strategy

The AIM-traded firm said the site had been part of the group since 2006, manufacturing epiwafers for photodetectors and radio frequency applications using molecular beam epitaxy (MBE).

It said the closure was aligned to its strategy of consolidating operations into strategic sites with superior economies of scale and production flexibility.

IQE said it would transfer the expertise, intellectual property and assets from Singapore to its Taiwan and North Carolina sites.

It followed the company’s announcement of the closure of the Pennsylvania site and consolidation into North Carolina by 2024.

In combination, the board said the actions would create an “optimised footprint” to pursue mass-production opportunities for wafers manufactured by MBE, including long-wavelength photonics and advanced radiofrequency (RF) applications for 5G.

IQE said it was liaising closely with its key customers in Asia to manage the transition, and anticipated no material impact on revenue guidance for the 2021 financial year as a result of this closure.

Year-on-year revenues for the 2022 financial year would reduce by around £3m due to the transition, but annualised cash savings post closure of about £4.8m would be generated from a combination of operational costs savings and a reduction in lease liabilities that were expected to have a favourable annualised income statement impact of around £1m.

Exceptional cash closure costs of about £2.5m were anticipated to be incurred in decommissioning the site and migrating capability.

“IQE’s breadth of operations across Europe, the United States and Asia are a source of significant competitive advantage,” said chief financial officer Tim Pullen.

“By focussing investment in strategic sites within each of these regions and consolidating the group’s footprint, we will optimise our ability to generate growth from differentiated technologies, whilst reducing costs and increasing gross margins.”

At 0904 BST, shares in IQE were up 0.11% at 47.6p.