Disappointing half year results from IQE
Compound semiconductor wafer firm IQE has announced its unaudited results for the six months ended 30 June 2025 with revenue down to £45.3m (H1 2024: £66.0m) and operating loss of £23.5m (H1 2024: (£12.1m)).
Within this, wireless revenue of £18.6m (H1 2024: £38.8m) decreased 52 percent year-on-year reflecting slow demand due to the overhang of 2024 customer inventory builds, tariff uncertainty and softness in consumer purchasing of mobile handsets.
Photonics revenue of £26.6m (H1 2024: £26.8m) was broadly flat year-on-year reflecting strong performance in InP data communications for AI markets, partially offsetting funding delays in US military and defence Infrared markets.
Strategic Review
On 8 September, IQE announced the expansion of its ongoing Strategic Review to incorporate the potential sale of the company and confirmed that it was already in receipt of an approach from a potential offer.
Additional early-stage expressions of interest have been received following the announcement. There can be no certainty either that an offer will be made nor as to the terms of any offer, if made.
In addition, IQE continues to advance discussions relating to the sale of the group's operations in Taiwan. Should the sale of Taiwan be concluded, it is expected that the proceeds from such sale will be used to fully repay the Group's Revolving Credit Facility with HSBC Bank and the Convertible Loan Notes issued in March 2025, as well as providing IQE with cash to invest in its core operations.
Current trading and outlook
Uncertain macroeconomic conditions impacted trading in H1 2025, resulting in some end customer demand being fulfilled with their existing inventory. During this period, Wireless markets were affected by softness in mobile handset sales, and this is expected to persist through 2025. Additionally, delays to federal funding cycles in US military and defence sectors are resulting in the deferral of orders into 2026.
As previously announced, revenue for FY 2025 is expected to be between £90.0m to £100.0m, resulting in an adjusted EBITDA position of between £(5.0m) to £2.0m. Efficiency initiatives focused on cost structure and capacity utilisation are ongoing, with the aim of strengthening margins and cash generation.
The company says that its robust and ever-growing customer pipeline, featuring Tier 1 consumer brands, underscores ongoing market demand for the company's products, with market conditions anticipated to improve in 2026 as existing inventory levels start to normalise. IQE is seeing strong organic growth in multiple areas, including VCSELs for next-generation smartphones, InP products for data centre and optical communication markets, microLED for AR/VR and GaN RF products.
Jutta Meier, CEO of IQE, commented:
"Our first half performance fell short of expectations, driven by a combination of market headwinds and the unwinding of customer inventory. Despite this, I remain encouraged by the progress we have made and our continued investment in innovation is yielding promising results. We have made significant development progress in areas that are critical to our long-term strategy, such as in GaN and microLED, and are poised to capitalise on the opportunities in these growing markets.
"Looking ahead, our operational discipline supports IQE's long-term vision centred on sustainable growth. This is underscored by our continued strong customer pipeline, which reinforces my confidence in our diversification strategy. Additionally, I am pleased to see the increasing level of interest in our Strategic Review, and I look forward to updating the market on the progress we are making in due course."
