IQE, the Cardiff-based supplier of semiconductor wafers, has agreed to takeover the in-house manufacturing facilities of American firm RF Micro Devices (RFMD).
The deal produced a big boost in IQE's share price on Wednesday; by 08:42 the stock had risen 15.8%.
In essence, IQE will receive, but not pay for, a 150,000-square foot facility in North Carolina which is already set up to make the wafers which are used in things like smartphones and sat-nav equipment.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In return, IQE will provide discounts on contracts for RFMD, which needs the wafers for the microchips it manufacturers. It's easier for RFMD to outsource the manufacturing than do it in-house because the unit costs come down and the speed of delivery increases.
Dr Drew Nelson, the President and Chief Executive of IQE said of the deal: "This landmark agreement with RFMD, one of the true global leaders in the wireless semiconductor industry, provides us with a significant step up in our manufacturing capacity, bringing substantial financial and scale benefits to the group. This is a clear win-win for both organisations."
BS
-
8 of the best houses for sale with annexesThe best houses with annexes – from a period property in the Lake District to a 13th-century house with a two-bedroom annexe in Saltwood, Kent
-
Zelenskyy moves to appease Donald Trump – what happens now?Ukraine’s president Volodymyr Zelenskyy is conceding ground to secure the least-worst deal possible, says Emily Hohler
