IQE launches strategic review as FY revenues set to be flat

IQE said on Monday that it was launching a strategic review of its assets and considering a sale of its Taiwanese division, as it warned that revenue for the full year was set to be flat amid "weak" consumer demand in end markets.

In an update for the year to the end of December, the semiconductor wafer maker said revenue was expected to be "broadly flat" year-on-year, at around £115m.

"In line with the rest of the industry, we are continuing to see a slower than anticipated recovery in key sectors driven by weak consumer demand in end markets," it said, adding that full-year adjusted EBITDA was expected to be "at least" £5m.

IQE said it was launching a comprehensive strategic review of its asset base "to ensure that it has a strong capital position to further invest in its core operations".

"The board believes there is a significant market opportunity in IQE's core operations and remains focused on reducing its cost structure for profitable growth, servicing its customers and maximising value for shareholders," it said.

IQE said it will broaden its options as regards the proposed IPO of its Taiwan operations to include all strategic options, including a full sale. It has retained Lazard to advise on the strategic review.

In addition, the company is in the process of negotiating a proposal from its largest shareholder, Lombard Odier, regarding short-term financing to help IQE "navigate the ongoing market softness".

"Lombard Odier's willingness to extend up to circa £15 million via a convertible loan note with a conversion price of 15p per share…is a strong demonstration of Lombard Odier's confidence in the embedded value within the group," it said.

Executive Chair Mark Cubitt said: "The impact of the slow pace of recovery in the semiconductor industry can be seen across the sector and is reflected in our revenue expectations for FY24.

"Looking ahead, the strategic review, including the broader assessment of options for our Taiwan operations, will ensure we have a strong capital base to continue investing in our core business and support IQE's long-term strategy. We remain committed to delivering maximum value for our shareholders and serving our customers. We are confident in IQE's long-term prospects and inherent value."

At 0820 GMT, the shares were down 16% at 8.98p.