Update on growth strategy
Filtronic’s strategy is based on developing technologies that solve the most difficult
radio frequency (RF) engineering challenges, building deep partnerships with world-class
customers and continually investing ahead of demand. The company has put in place
a five-year growth plan, and we discuss progress with each of the main elements below.
Technology and product roadmap
New facility up and running
The transfer of production to the new Sedgefield facility is complete. The facility
covers 44,000 sq ft incorporating both manufacturing and office space. Management
estimates that the facility can support manufacturing for revenues of £200m+. Additional
manufacturing lines can be added for c £750k to support revenue generation of £10–15m.
R&D supports multiple projects
R&D spend was 17% of FY26 revenue, up from 12% in FY25, with key areas being product
development for ground station and payload satellite applications, and aerospace and
defence. In the longer term, the company is targeting spend nearer to 13% of revenue
but in FY26, management was comfortable spending at a higher level to ensure it can
exploit the current market opportunity. Filtronic works with its largest customers
to develop custom solutions for them but also has a range of standard products that
can be sold as needed.
Continued expansion into high-frequency spectrum bands
The company continues to expand into higher frequencies, with development activity
across V-band, W-band and D-band expanding the addressable market.
The development of V-band products enables Filtronic to target the mid-Earth orbit (MEO) and geostationary
Earth orbit (GEO) markets, which require much higher power products to support communications
over a much longer distance (low Earth orbit (LEO) altitude 160–2,000km, MEO 2,000–35,786km,
GEO 35,786km). During the year, the company sampled its first 200W V-band solid state
power amplifier (SSPA) system, offering a world-leading power output for a solid state
product. The V-band market currently relies on travelling wave tube amplifiers (TWTAs).
TWTA technology offers high power output in a lightweight design, but is complex to
manufacture and has a shorter lifespan than an SSPA. SSPAs have previously not been
able to match the power output of TWTAs, but this is changing and SSPAs offer better
power linearity. Management believes that its experience of high-volume manufacturing
of E-band SSPAs positions it well to compete against the incumbent technology. The
company estimates that the V-band ground station SSPA market could be worth $3bn over
the next 10 years. While the volume of products required for the GEO market is much
smaller, each individual product is worth much more. For example, a V-band TWTA for
GEO sells for c $250–300k.
The company has also successfully developed W-band technology, from which it generated initial revenue in FY26.
In H226, Filtronic won a contract from the UK Space Agency to develop a 550W Ka-band SSPA. As for the V-band products described above, this would also replace TWTA technology
and provide access to the wider LEO and MEO markets. Being able to support Ka-band
technology is crucial to winning multi-band contracts.
The timing of development and production by frequency band:
- FY27: E-band GaN in volume deployment; release of first high power V-band standard
product; system manufacturing capabilities established.
- FY28: V-band GaN in volume deployment; first Ka-band products ready for production;
sub-systems move into production.
- FY29: W-band GaN in volume deployment.
Key customer and strategic customer relationship development
During FY26, the company added new customers in the space sector and won new orders
from an existing defence prime. The contribution from SpaceX reduced from 83% of revenue
in FY25 to 68% in FY26, highlighting the wider spread of customers. The next largest
customer, a telecoms business, contributed 10% of revenue followed by a defence customer
contributing 8%. The contribution from space customers other than SpaceX increased
193% y-o-y.
The SpaceX relationship remains strong, with the company receiving its largest-ever order in August 2025, worth $62.5m, to develop GaN-based E-band SSPAs for delivery in FY27
and FY28 (delivery has already started). The company expects the contribution from
SpaceX to fall to nearer 55% of FY27 revenue as other customers make a larger contribution.
In the space market, the company is now working with five major players: SpaceX, Airbus/OneWeb,
Viasat and two unnamed customers. This includes the November 2025 contract to supply €7m worth of RF assemblies for use in a LEO satellite constellation
and the two contracts with an unnamed US satellite manufacturer (March 2026 and June 2026) worth $8.4m in total.
In the defence market, the company received a £13.4m order to supply high-performance modules to a defence prime. Defence customers typically
place orders further in advance to ensure all long-lead time materials are secured
for production and Filtronic typically expects customers to fund the inventory build,
which partly explains the £7.7m increase in deferred income compared to end-FY25.
As well as diversification of customers across end markets, the company is looking
at geographic expansion. It recently entered into a non-binding memorandum of understanding
(MoU) with Marubun Corporation, a Japanese electronics manufacturer. As part of the
MoU, Marubun will provide an established route to market, identifying and evaluating
emerging business opportunities and technology trends within Japan. Marubun will also
support the growth of Filtronic’s brand presence in the region, facilitating engagement
with key industry stakeholders, prospective partners and customers to accelerate market
entry and long-term business development. Relationships Filtronic is currently nurturing
with Asian customers could lead to revenue contributions in the next two years.
Must-win projects across sectors
The company has revamped its programme management to ensure successful handling of
multiple projects in parallel. It is now working on c 35 projects, up from c 20 at
interims. The company also established a bid management function to ensure it can
respond to RFQs on a timely basis.
In December 2025, it received authorisation to proceed with a contract to supply high-performance active components for a major European
defence prime, and has won orders from four other space customers in FY26. The announcement
of an initial contract with a US-based customer in March to develop and qualify a
high-performance amplifier system for satellite ground stations followed by another
contract award from the same customer to design a high frequency transmit/receive
(Tx/Rx) module for on-satellite provides potential for high volume production in the
medium term.
Moving up the value chain
Towards the end of 2024, Filtronic established a systems team in Cambridge to support
the company in expanding from pure component supply to full system design. The team
now has multiple developments underway, including working on a high-power 400W V-band
solution. The company is planning to expand the Cambridge facility to provide capacity
for headcount of c 70, up from the original c 20 level.
