Market Cap£274.4m

Last Close 34.15p

IQE is the leading supplier of epitaxial compound semiconductor wafers globally. The principal applications include radio frequency semiconductors, devices for optical networks, vertical cavity surface emitting lasers (VCSEL) and infrared semiconductors.

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Investment summary

IQE has announced that year-on-year growth in the volumes of GaAs epiwafers was lower in Q421 than it had expected. We believe this relates to supply chain issues in the smartphone industry, which are likely to be resolved during FY22, rather than consumer demand for handsets. We have changed our estimates in line with revised management guidance, cutting FY21 PBT from a £0.1m profit to a £9.2m loss, and our FY22 PBT estimate from a £7.3m profit to a £4.7m loss.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2019A 140.0 16.2 (7.0) (2.46) N/A 30.0
2020A 178.0 29.9 3.2 0.29 117.8 7.7
2021E 169.5 27.4 0.1 (0.04) N/A 10.4
2022E 182.4 39.5 7.3 0.68 50.2 8.2
Industry outlook

IQE’s Singapore operation manufactures epiwafers for photo detectors and radio frequency applications using molecular beam epitaxy (MBE) systems but is relatively underutilised. Following the site closure, most of its MBE reactors will be moved to IQE’s North Carolina site, and the remainder to its facility in Taiwan. By 2024 all of the MBE reactors at IQE’s Pennsylvania site will be moved to the North Carolina facility as well, creating an operation with the scale to take advantage of the opportunities for using MBE to make long-wavelength vertical cavity surface emitting lasers (VCSELs) that can be used below OLED screens in mobile devices, thus dispensing with the ‘notch’, and in eye-safe vehicle LiDAR as well as sensors for healthcare applications

Last updated on 02/12/2021
Content on IQE
IQE – Optimising its MBE footprint
TMT | Update | 1 October 2021
IQE – executive interview
TMT | Edison TV | 13 September 2021
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Share price graph
Balance sheet
Forecast net debt (£m) 53.6
Forecast gearing ratio (%) 20
Price performance
Actual (27.0) (35.8) (52.2)
Relative* (25.5) (34.7) (57.1)
52-week high/low 88.3p/34.0p
*% relative to local index
Key management
Phil Smith Chairman
Drew Nelson CEO
Tim Pullen CFO
Amy Barlow Head of Investor Relations