IQE plc, the leading global supplier of advanced semiconductor wafer products and services, has entered into a new multi-year volume manufacturing agreement expected to be worth in excess of £1m a year for epitaxial wafers for use in optical communications applications.
The new supply agreement is with an existing key strategic customer that already has a significant presence in the Asia Pacific region and includes the rapidly growing market for photonics in China. The new contract increases IQE's share with a guaranteed minimum of 80% of the customer's business, which is expected to be worth more than £1m in additional annual revenues to IQE's photonics business unit.
Customers are increasingly seeking to ensure security of supply through entering into long-term supply agreements to support products and devices for LTE backbone communications for base stations, Gigabit Passive Optical Networks (GPON) and Fibre to the Home (FTTH) at 2.5G and 10G, migrating to 100G over the coming years.
The agreement also includes scope for adding new products which are currently undergoing qualification, such as Avalanche Photo Detectors (APDs) for high-speed, long-reach detectors.
The new contract takes the form of a "Vendor Managed Inventory" (VMI) agreement which enables IQE to optimise production efficiency and manage any short-term fluctuations in demand.
Dr Drew Nelson, IQE CEO, said:
"IQE provides the key enabling technology that is helping to meet the ever increasing demands on optical communications driven by trends such as 'Big Data' and 'The Internet of Things.'
"As the importance of photonic applications continues to grow, customers increasingly need to ensure security of supply to meet the needs of their technology roadmaps and are seeking to enter into volume manufacturing agreements.
"IQE is the global leader in wafer outsourcing and is seen by its customers as their key strategic partner to support this rapidly growing industry sector."