u-blox Refocuses on GNSS Solutions, Exits Cellular Business

Key Takeaways

u-blox will phase out its Cellular business to concentrate on GNSS semiconductor solutions.
The Cellular segment generated CHF 27 million in revenue but reported significant losses in H1 2024.
The transition is expected to eliminate annual EBIT losses of at least CHF 30 million, with restructuring costs projected at CHF 65 million in early 2025.

Strategic Shift to Focus on Locate Business

u-blox has announced a strategic pivot, deciding to enhance its Locate business while phasing out its Cellular operations. This shift aims to solidify u-blox’s role as a leading provider of GNSS (Global Navigation Satellite System) semiconductor solutions in an expanding market, particularly in sectors like autonomous vehicles, industrial IoT, and tracking technologies.

The decision follows a thorough evaluation of the company’s operations, concluding that abolishing the Cellular sector is essential for aligning with long-term strategic priorities and improving operational efficiencies. Currently, the Cellular business employs over 200 personnel but has struggled financially, reporting revenues of CHF 27 million alongside an adjusted EBIT loss exceeding CHF 15 million during the first half of 2024.

u-blox plans to boost its performance in the Short-Range business segment, which includes Wi-Fi and Bluetooth technologies. According to CEO Stephan Zizala, this strategic redirection will allow the company to “unlock even greater potential within the positioning technology market” and accelerate the creation of innovative solutions. Zizala stressed the company’s commitment to supporting affected employees, customers, and partners during this transition.

The process of phasing out the Cellular business is set to commence immediately, with most cost reduction measures anticipated to be completed by 2025. Financial estimates show that this move will eliminate annual EBIT losses of at least CHF 30 million. However, significant one-time costs are expected, including a CHF 65 million negative EBIT hit in Q1 2025 due to restructuring, and a non-cash impact of around CHF 31 million in Q4 2024 attributed to impairment of capitalized research and development assets.

In terms of ongoing financial forecasts, u-blox reaffirms its revenue guidance for the fourth quarter of 2024, projecting income between CHF 60-70 million and an adjusted EBIT margin of -25% to -15%. As part of its financial restructuring initiatives, the company completed a CHF 20 million cost optimization program by December 2024, with savings beginning to reflect in financial statements in the latter half of 2024, fully impacting in early 2025.

To engage with stakeholders under this new strategic framework, u-blox will host a Q&A session on January 14, 2025, at 14:00 CET to discuss the implications of phasing out the Cellular business.

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