iqe plc...this presentation has been prepared by and issued by, and is the sole responsibility of,...

Enabling Advanced Technologies

IQE Plc

Introduction to IQENovember 2017


Disclaimer

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1


An Introduction to Compound Semiconductor Technology …

2


Reference Point : Silicon Chip Supply Chains …

Silicon Wafer(Semiconducting material)

Chip Fabrication

(Patterning, Etching, metalisation, packaging )

Device(eg smartphone)

Chips

But, silicon is not the only semiconductor …

3


Compound semi chips

Silicon chips

Compound semis – the fastest growing semiconductor technology

Wafer Chip Device

We make advanced wafers

Which our customers

use to make the highest

performance chips

Combining a range of semiconducting elements…

… That have more advanced properties than Silicon

4


How we make compound semiconductor wafers …

Epitaxy – engineering advanced materials

• Atomically engineered films (up to >400 individual films)

• Leading edge crystal growth technology

• Bespoke to each application

• Extensive qualification requirements

• Large barriers to entry

5


The markets for Compound Semiconductors…

6


Evolution of semiconductor technology

Internet

Mark

et

siz

e

Source IQE: not to scaleFor illustration

▪ 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 performanceHigher Cost

Hybrid Technology : “CS on Si”

▪ High Performance of CS Low cost of Si

SILICON WAFER CS SUBSTRATE

EPI FILMS

SILICON WAFER

EPI FILMS

7


The CS industry is going through an Inflection Point

Healthcare, Robotics & Autonomous systemsHeathcare, medical diagnostics & treatmentRoboticsSelf drive vehiclesMachine awarenessAdvanced Sensor Technology

Communications & Big dataMobile and infrastructure

Data storageInternet of Things

Wearables & TeleHealthcareSensing and biophotonics

Energy efficiencyClean energy (CPV solar)Solid State Lighting (LED)

Power switchingBase Stations

Factories of the Future

Defense and AerospaceSatellite powerCommunicationsUAVsInfra Red ImagingFood Security

8


-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

Diversification

The evolution of IQE: geared to growth across multiple markets

Sales £’m EBITDA £’m

SALES& EBITDA*

Building the Platform

9

*EBITDA has been calculated as earnings before : non-controlling interest, tax, share based payments, finance costs, depreciation of tangible fixed assets, amortisation of intangible fixed assets, loss/(profit) ondisposal of fixed assets, impairment of assets, gain on release of contingent deferred consideration, and restructuring and re-organisation costs. .


Enabled by IQE’s broad IP portfolio

• Broad portfolio of compound semiconductor materials IP

• Trade secrets and patents

• Long-term collaboration with Universities and Blue-chips

• IP environment fragmented, IQE competes with different players in each market

• Breadth of IQE’s IP is differentiator

• Business units reflect IQE’s market focus

InP

GaAs

cREOTMIII-V on Si

RF GaN

GaNPower

Sb IR

10


• Cardiff City Deal to fund infrastructure

New foundry – the “Cardiff City Deal”

11

11 year lease

3 year rent free

Option to purchase (up to ~£40m)

Part of the expanding CS Cluster (>£300M)

• IQE to fund tools

First 5 tools on order

Capacity for up to 100 new tools


IQE’s Outlook – its market engagement

12

Enabling Advanced Technologies 13

A 3 to 5 year view – target growth rates

2018

2019

2020

2021

2022

Power Amplifiers RF FiltersBasestations

Industry Target CAGR 10-20% 20-30% 30-50%

3D Sensing FibreOptics

Face ID

Augmented reality

LIDAR

60-80%

Industrial

FTTX (DFB/NIL)

DWDM (NIL)

30-50% 50-80%Estimated Market by 2022 ($m)* $ 500m $ 250m $ 1000m $ 800m $ 400m $ 150m

Machine Vision

Industrial heating

Datacentres

Handset frontEnd filters

Base stations

5GRadar

Wireless charging / microwave

*These are IQE management estimates, and are based on internal and third-party sources, which are inevitably subject to a number of uncertainties.

https://mshawblog.wordpress.com/tag/mobile-3d-sensing/

Enabling Advanced Technologies 14

Charging

A 3 to 5 year view – target growth rates

2018

2019

2020

2021

2022

Automotive Space Terrestrial

30-50% 40-60% 40-60%

$ 50m $ 100m $ 150m

Defence Consumer

15-20%

$ 125m $100 m

30-50% 10-15%

$ 250m

Industrial Consumer

10-15%

$ 50m

Inverters

Data Centres

AdvancedBiometrics

ConcentratedPhotoVoltaics

CPV

Large Satellites

LEO Constellations

Electric Vehicles

Wearable Health Monitoring

Night Vision

Military

Environmental HALE

Industry Target CAGREstimated Market by 2022 ($m)*

*These are IQE management estimates, and are based on internal and third-party sources, which are inevitably subject to a number of uncertainties.


A closer look near term driversto accelerate growth

15


VCSEL – The era of low cost Laser Technology

VCSEL’s are High performance Low cost Lasers that are transforming :• Sensing• Communications• Consumer• Industrial

16


VCSEL

epiwafer

VCSEL chip

Magnetic storagePrinting

Data centres

Cosmetic

3D Sensing

Industrial Heating

VCSEL – The Applications

LIDAR

17


DFB - full service wafers for FTTX

• DFB Laser = Distributed Feed Back Laser

• Critical for fibre optic communications• Fibre to the premises (FTTX)• Data Centre• Core network

• DFB wafers : Base + grating + overgrowth

• IQE historically provided Base epi only

• We have developed a potentially disruptive technology for grating - Nano Imprint Lithography (NIL)

• Multiple qualifications for “full service” wafers

Grating – viewed by Scanning Electron Microscope

XX X X X X X X X X X X X X X X X XXX XX XXX X XXX

Overgrowth

Grating

Base

18


GaN for RF Applications

• Gallium Nitride (GaN) has multiple use across RF application

• IQE offers materials technologies covering both GaN on Silicon Carbide (SiC) and GaN on Silicon

• Engaged with major industry playersRF Energy

Base Stations

Military Radar

19


A closer look at mid-term drivers

to accelerate growth

20


Mid term drivers to accelerate growth:Wireless filters (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

Filter Content $0.25 $1.25 $4.00 $7.25

Switching / Tuning $0.00 $0.25 $1.50 $2.25

Power Amplifiers $0.30 $1.25 $2.00 $3.25

Other $0.00 $0.00 $0.50 $0.50

Total RF content $0.55 $2.75 $8.00 $13.25 +

Typical2G

Typical3G

RegionalLTE

GlobalLTE

Potential routes to access using cREOTM

technology

21

Source: Qorvo (RFMD/TriQuint), 2015


Markets & industry challenges for next generation wireless

Parameter Limiter ReasonIQE Potential

Solution

IQE Capab

ility

Power Added

Efficiency(PAE)

Offset voltage

Fundamental to current materials

solutions

Alternate collector

Dilute nitride base

Frequency

PA Cutoff frequency

Fundamental limit of GaAs HBT

InP-based HBT

GaAs-based PHEMT

Filter Frequency

Fundamentalrequirement for

thin piezo-electric layers

Novel epi-solution (AlN)

Device Size Chip SizeFundamental limit

of feature sizeNovel integrated

device stack

22

Esti

mat

ed m

arke

t va

lue

Source: MACOM/IQE


Compound semiconductors for Power, RF and Lighting

10 100 1K 10K 100K 1M 10M

10

100

1K

10K

100K

1M

10MSiC

GaN

Silicon

Operating frequency (Hz)

Ou

tpu

t Po

wer

(V

A)

High Speed

High Power

Power inverters

EV/HEV

Micro InvertersPC (DC-DC)

Data Centre

Power Inverters

23

Source: IQE estimates


Potential applications for IQE Solar Technology

• High efficiency solar cells

• 44% efficiency (Silicon ~18%)

• Power Generation Markets

• Satellites

• LEOs

• Drones

• Terrestrial

24


Mass market of advanced Infrared

The 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

25


Longer Term Growth Drivers

26


Longer term drivers to accelerate growth:Potential adoption of hybrid CS-on-Si across multiple markets

• Founded in 1988 IQE has almost 30 years experience in semiconductors materials technology

• IQE’s IP portfolio covers multiple materials systems

• IQE’s expertise directed towards combining compound semiconductor with silicon to deliver high performance chips at low cost

• crystalline Rare Earth Oxide (cREO™) provides a novel technology base

• Transition to cREO™ expected to happen application by application over the coming years, increasing IQE’s addressable markets

Epitaxial layerscREO™ interface layer

Epitaxial layers

cREO™ Approach

Standard III-V epi

27


Summary

• The CS Industry is moving through an Inflection Point

• IQE has geared its strategy and evolution to capture this opportunity

• At the heart of its strategy IQE’s IP portfolio is a key differentiator

• This is supported by a flexible and cost effective route to scaling the business

• This has translated into market leadership for IQE, with a sound basecasefor continuing growth

• However, the breadth and depth of IQE’s engagement in a broad range of near, mid and long term opportunities provide strong upside to the basecase

• The start of the VCSEL ramp in June 2017 provides a key milestone on this journey

28


Q&A

29


Appendices


Our global footprint

Cardiff, UK

CVD

Milton Keynes, UK

VGF & LEC

Singapore

MBECardiff, UK

MOCVD

Bath, UK

CVD: FS-GaN

Washington, USA

VGF & LEC

New Jersey, USA

MOCVD

Pennsylvania, USA

MBE & MOCVD

North Carolina, USA

MBE

Hsinchu, Taiwan

MOCVD

Massachusetts, USA

MOCVD

31


Dr Andrew W Nelson OBEPresident and Chief Executive Officer

32

Phillip RasmussenChief Financial Officer

Dr Godfrey H H Ainsworth FCAChairman, Non-Executive Director

Dr Howard WilliamsOperations Director

Phil SmithNon-Executive Director

Sir David GrantSenior Independent Director

A highly experienced management team

iqe plc...this presentation has been prepared by and issued by, and is the sole responsibility of,...

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