Taiwan-based US defense supplier to apply for Chips Act subsidies

Julian Ho, Taipei; Rodney Chan, DIGITIMES Asia 0

Credit: US Navy

Taiwan-based IntelliEPI, a supplier of epi-wafers for US military defense projects, intends to apply for US Chips Act funding for its new factory site in the United States.

IntelliEPI has reported sales of NT$148 million (US$4.81 million) for the first quarter of 2023, decreasing 32.7% year on year, with gross profit margin reaching 24.94%.

IntelliEPI chairman YC Kao said the first-quarter sales declined as semiconductor demad remained in the doldrums. Many big companies still had high levels of inventory and were slowing down the pace of releasing orders, Kao said, adding his company did not lose any of its customers.

In terms of product category, 44.8% of the sales came from the InP segment, 34.0% from GaAs, and 18.3% from GaSb and other services.

Kao said the semiconductor market has already hit bottom, and the company is preparing to fulfill various orders by applying for subsidies offered by the US Chips Act and expanding its fab capacity.

Sources familiar with the compound semiconductor sector noted that demand for PAs from the consumer electronics market has been weak in 2023, but demand for aerospace, military and other niche applications has been stable.

Sales performances at compound semiconductor makers, such as Win Semiconductors and AWSC, whose products are mainly PAs for handsets or Wi-Fi PAs, are expected to see some improvements starting in the second quarter of 2023. But it remains to be seen how much improvement they will see throughout the rest of the year, said the sources.

But epitaxy suppliers, such as IntelliEPI and Visual Photonics Epitaxy, and IDM Transcom, still see stable demand for their niche market products. IntelliEPI is a supplier of military applications for the US defense projects, and demand for its GaSb infrared products has been stable, the sources said.

IntelliEPI has also obtained volume production orders for military- and aerospace-use pHEMT, with demand increasing, the sources said. The company is also ready to conduct negotiations about volume shipments with a major customer for GaAs infrared products, the sources said, adding it is also in talks for military contracts for infrared night-vision light sensors.

Kao said the company is adjusting its business strategy, and will continue to strengthen the software-hardware capability for its molecular beam epitaxy (MBE) systems.

In terms of hardware, the company already is in talks with customers for the sale and upgrade of MBE systems. Its in-house developed GaN MBE machines are expected to enter mass production by the end of this year. It has also started developing 300mm GaN/Si MBE machines.