UK's IQE sees AI data centres driving growth after challenging year
IQE's Financial Performance and Market Outlook
By Simone Lobo
2023 Financial Results and Share Performance
May 28 (Reuters) - Britain's IQE on Thursday forecast that resilient semiconductor demand linked to data centre construction would lift its 2026 profit, after reporting a 60% fall in annual adjusted core profit last year due to softness in mobile handset demand.
Shares of the company, which supplies the wafer products used in the iPhone's facial recognition sensor, fell 5.2% to 48.05 pence by 1204 GMT, giving back some of this year's roughly 900% gain.
Supply Chain Challenges and Raw Material Prices
Impact of Indium Phosphide and Gallium Prices
Supply shortages and Chinese export restrictions have significantly increased prices of raw materials like indium phosphide and gallium, which are in demand for their role in data centre construction, CEO Jutta Meier told Reuters.
IQE's Response to Rising Costs
"We are working together with our customers to really ensure that we are sharing the pain of that pricing," Meier said, adding that this could be through increasing volumes rather than just passing on costs.
Market Reactions and Strategic Moves
Share Sale and Analyst Commentary
Peel Hunt analyst Damindu Jayaweera said IQE's shares were taking a pause after rallying on the back of a £13 million share sale backed by U.S. chipmaker MACOM..
Sector Diversification and Strategic Review
The semiconductor wafer maker, which also supplies the aerospace and defence sectors, reported adjusted core profit of £3.2 million for 2025, a period that saw disruption from U.S. tariffs and a slowdown in demand for electronics, prompting the company to launch a strategic review.
Overcapacity and Annual Results
Overcapacity following the slowdown in demand weighed on IQE's annual results, Meier said.
Future Outlook: AI and Data Centre Demand
However, an uptick in AI usage and the subsequent demand for equipment used in data centre construction means the company expects profit to grow in the high-single to low-double-digit millions this year, with revenue seen increasing 20%.
(Reporting by Simone Lobo in Bengaluru; Editing by Rashmi Aich, Kirsten Donovan)
