IQE sees sales slump, tips slow market recovery
Sales in the first half of 2023 at compound semiconductor wafer supplier IQE plc (Cardiff, Wales) were down by 39.7 percent on the same period a year before.
The drop was slightly more than the £30 million fall that had been tipped in a trading update issued in March (see IQE loses a third of its value on trading update). The company said that a market rebound in 2H23 would be slower than previously predicted.
The drop in sales led to major losses. IQE announced a loss after tax of £21.3 million on revenue of £52.0 million in the 1H23. Sales were down from £86.2 million in 1H22 and the loss after tax had grown from £8.3 million in 1H22.
The company said its adjusted net funds position was £5.3 million after it had raised £29.7 million in May to strengthen the balance sheet.
“IQE has delivered H1 revenue in line with our revised market guidance. In a challenging macro environment, we have taken decisive action to manage costs and deliver immediate efficiencies and longer-term margin benefits,” said Americo Lemos, CEO of IQE, in a statement. “We are accelerating our diversification strategy with new customer designs in GaN Power electronics and broadening our market penetration into the China wireless market.”
The biggest decline in sales was in IQE’s wireless business where sales halved to £22.4 million, reflecting weakness in the smartphone business. But reduced sales were also see in photonics. CMOS++ business was the exception showing an increase of 43.1 percent to £1.6 million in the period due to growth of silicon-based switches for power control.
The company is in the process of cutting jobs to deliver 10 percent savings with a restructuring cost of £1.2 million. Previously announced consolidation of MBE business at a site in North Carolina is due to be completed by 1H24, the company said.
In its outlook IQE said that the semiconductor industry downturn is stabilizing. There would be pockets of recovery in 2H23 but recovery would be slower than previously anticipated. IQE said it expects sales to grow sequentially in 2H23 by a double-digit percentage and expects to be profitable at an adjusted EBITDA level for FY 2023.
The company’s share price was steady on the news at about 16 pence per share and a market capitalization of about £170 million. The company’s stock had traded at 50p per share in 1Q23.
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