2006 – Letter from CEO
The year 2006 was a productive year for Silex. Our strong sales and earnings growth continued to impress in 2006; however, I believe our greatest accomplishment for 2006 were that we proved our capability for high volume MEMS production. Producing in long series is one of the cornerstones of Silex’ growth strategy and in 2006 the manufacturing revenue accounted for over half of total net sales. Also in 2006 Silex produced a small but not insignificant profit before depreciation, which is an inspiring increase over 2005. This increase was made possible by the combination of boosted sales growth and increase productivity.
Our 2006 net sales of $13 million represented an 85.0% increase over the 2005 level. The telecommunications business, which represented 37% of our total net sales, doubled in 2006, while at the same time our Life Science business, which represented 40% of sales grew by over 70%. Even with this strong growth, Silex has managed to maintain focus on short lead times and time to market. We have continued to secure new development projects which will assure continuing growth in the years to come. Our leading markets are Europe and North America. These markets represented around 60% and 35% of total net sales respectively. Among our other markets, Japan and China account for the biggest share. We continue to increase our investments in all of these markets with the belief that they continue to have great potential now and in the future.
One of Silex’ important strength factors is our highly qualified employees who form a world class team with wealth of experience. During 2006 we added 20 employees, primarily in the production area. At the end of 2006 the number of employees was 67 of which ten employees have a doctorate degree in semiconductor engineering and MEMS. Our sales office in Boston has also been reinforced during 2006, with an additional Large Account Sales Manager.
Our manufacturing team had a tremendous year in 2006. They were able to incorporate the massive sales growth without increasing the lead times. In fact in many cases the lead time actually has decreased. In the end of 2006 Silex received an additional funding of $5 million for investments in new key equipments. To help us better service our customers’ needs the investments will primarily be used to expand our manufacturing capabilities.
Having great business and production systems continues to be a competitive advantage for Silex. Our information technology team continues to redesign and upgrade our systems. To manage the coming volume growth several major improvements have been made to our XLBatch production system. Silex believes our internal ability to quickly modify our systems to meet customer needs is one of our key competitive advantages.
In closing, I believe it is important to thank all of the people on the Silex team who worked extremely hard all year to produce the great results we are able to report. Our vision is to be the number one MEMS company in the world with the goal of achieving a dominant share of the MEMS contract business market. This requires sustained growth of more than 50% per year, which is more than double the pace of the MEMS market in general. Silex will achieve this by continuing to help our customers to take their products from concept to volume manufacturing, and by offering high-quality, high precision products at short lead times, both for prototypes and mass production.
Jan Nerdal, CEO Silex Microsystems
