CONNECTING THE COMPOUND SEMICONDUCTOR COMMUNITY
June 2011 Volume 17 Number 4
Editor-in-Chief David Ridsdale
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Consultant Editor Richard Stevenson PhD
richardstevenson@angelbc.co.uk +44 (0)1291 629640
News Editor
Dr.Su Westwater
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Director of SOLAR & IC Publishing Jackie Cannon
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Chief Operating Officer Stephen Whitehurst
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Bill Dunlop Uprichard – CEO Stephen Whitehurst – COO Jan Smoothy – CFO Haroon Malik, Jackie Cannon, Scott Adams, Sharon Cowley, Sukhi Bhadal
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stephen@angelbc.co.uk dh@angelbcl.co.uk js@angelbcl.co.uk mg@angelbcl.co.uk sc@angelbcl.co.uk robin@angelbc.co.uk jc@angelbcl.co.uk dr@angelbcl.co.uk
editorialview
Playing the markets E:
tbrun@brunmedia.com E:
jjenkins@brunmedia.com
THE COMPOUND SEMICONDUCTOR INDUSTRY is undergoing tremendous growth. According to the leading analysts, sales in the biggest sector, LEDs, will rocket from $3.9 billion in 2005 to $18.9 billion by 2015. And shipments of GaAs chips, the second largest III-V market, should more than double to over $6 billion during the same timeframe.
Given these rocketing revenues, it is tempting to invest in a portfolio of III-V shares. But if you want to make good money, you’ll need to be a canny investor. Compare stock prices now to where they stood a year ago – as we have done in this issue (see p. 42) – and you’ll see that while some companies have made tremendous gains, others have headed south in a big way.
Few could have anticipated that it is Cree that has taken the biggest fall, with shares dropping from almost $80 to just around $40. The reason: falling profitability, stemming from overcapacity in the global chip market. What has happened is that the success of the LED industry has encouraged many companies to enter this arena, and supply now exceeds demand, driving down prices.
At the opposite end of the spectrum is IPG photonics, a company that dominates the fibre-laser market and occupies pole position on our share price leaderboard. And one place behind them is Cardiff-headquartered epiwafer manufacturer IQE, a former employer of mine.
It has clearly been a great 12 months for IQE, which added a second source to its antimonide substrate manufacture last Fall via the acquisition of Galaxy Semiconductors. This has bolstered revenue and helped the company to post full year profits of £6 million for 2010 - £4 million more than 2009, which was its first profitable year for some time. The share price has flown on the back of these results: last April it was less than £0.20, and now it is hovering around the £0.45 mark.
Although I’m not a player of the stock markets, I do own a few shares in IQE. And I guess you’re wondering whether I’ve made a small pile from this investment? Well, no – not at all, unfortunately. I made the mistake of buying my shares a decade or so ago when all tech stocks were booming, which means that I need the company’s share price to quadruple from today’s value to just get me back into the black. So if you’re ever wondering where to put your money, don’t ask me for advice.
Richard Stevenson PhD Consultant Editor
June 2011
www.compoundsemiconductor.net 3
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