Rakon in the red amid global slowdown in rollout of 5G

Semiconductor chipmaker Rakon has plunged into the red amid a global slowdown in the rollout of 5G networks.

Key numbers for the six months ended September compared with a year ago:

• Net loss $10.4m vs $0.5m profit
• Revenue $41.7m vs $61.3m
• Underlying loss $7.3m vs $5.3m profit
• No dividend

Chief executive Sinan Altug said the half-year period was "exceptionally tough", particularly in the telecommunications and positioning markets.

"These markets continued to be affected by macroeconomic conditions that slowed investments in 5G mobile networks globally, and extended timeframes for customer inventory normalisation across both markets," he said.

The company's revenue was also hit sharply as a result, offsetting gains made in the aerospace and defence markets.

"Gross margins were impacted by reduced sales volumes, $1.5m of increased inventory provisions, and one-off adjustments. Opex [operating expenditure] was impacted by $1.7m in unfavourable FX [foreign exchange] movements, and restructuring and acquisition proposal related costs," Altug said.

The company had reduced it's global workforce by 22 percent in order to save costs, and reduced inventory by 14 percent.

Rakon said it's balance sheet was "strong" with net assets of $148.3m and $15.8m in net cash, $2.1m lower than a year ago.

It forecast an improved second half, led by aerospace and defence, but expected telecommunications and positioning markets to remain subdued, although it would improve.

Rakon was tracking in the lower half of it's full-year underlying earnings guidance of $5m to $15m.