Dynex Power’s Capacity Expansion Proceeding on Track
Lincoln, England, March 15th, 2010 - Dynex Power Inc., a leading specialist high power semiconductor company, today provided a status report on the expansion program at its manufacturing facility in Lincoln, England. Dynex is investing $21 million to enhance and expand its fabrication capacity for silicon chips to be used in IGBT modules. The existing line, which processes 4-inch diameter silicon, is being replaced by two 6-inch lines. The installation of the two new lines will increase capacity approximately tenfold. The largest portion of the project output is expected to be sold to Dynex's majority shareholder, Zhuzhou CSR Times Electric Co., Ltd. to take advantage of the dynamic growth in China's rail infrastructure. Dynex's program was funded by the Company's successful rights issue that was completed in December 2009.
The Company indicated the upgrade and expansion project remains on time and on budget. All the main capital items required to start production have been acquired and delivered. Engineers are on site and actively engaged in the installation. In addition, field testing of the first product is proceeding well in China. The Company expects the project to be completed by the end of calendar 2010.
Dr. Paul Taylor, President and Chief Executive Officer of Dynex, noted that "We are pleased with the construction progress. And while we continue to expect that the project will be completed by the end of this year, we are aware that construction projects like this entail risk, and unforeseen future problems may delay our progress." Dr. Taylor continued, "We are keenly aware of the rapid pace of Chinese rail expansion. It has been reported that China's US$735 billion economic stimulus project includes very substantial expenditure on railways, providing an estimated 41,000 kilometres of new rail track along with new train sets and rail equipment. CSR Times Electric is part of a robust Chinese enterprise that plans to supply converter and control systems for such rolling stock. The resulting demand for IGBT products is expected to exceed Dynex's production capability even after the expansion project is complete, and discussions are in hand regarding plans to fill this gap in production.
Bob Lockwood, Finance Director and Chief Financial Officer of Dynex, added that he continues to regard the investment program as transformational to Dynex's financial performance. Mr. Lockwood said, "While the extensive construction will limit our revenue growth in 2010, we continue to believe that we will experience some top-line improvement over 2009. The improved revenue growth attributable to the capacity expansion is anticipated to become evident starting in Q2 of 2011. We also expect that margins are likely to be impaired during the construction period, but will similarly improve in 2011."