The boom in artificial intelligence has fuelled increasing demand for chip components made by IQE.
The order book for wafers produced by the Cardiff-based, London-listed company had grown and was likely to do so further, it said in an update yesterday that sparked a 28.8 per cent, or 5¾p, jump in its share price to 25¾p.
IQE said it was increasing its market share in China, a key market, as its annual pre-tax losses fell to £28.8 million in the 12 months to the end of December. Revenue dropped 31 per cent to £115.3 million, from £167.5 million previously.
It said sales had been hit by a downturn in the industry over the first three quarters of the year, but there had been “a gradual improvement in market dynamics and customer demand” in the last three months. Despite uncertainties in the global economy, IQE said its order book was “strengthening”.
The business was founded in 1988 and was floated on Aim, London’s junior stock market, at the height of the dotcom boom in 1999. IQE, which has 670 employees in nine manufacturing sites in Britain, the United States, Taiwan and Singapore, forms part of a cluster of semiconductor businesses in south Wales that includes Newport Wafer Fab, SPTS Technologies and Microchip, along with universities in the region that have a particular expertise in the technology.
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The “wafers” that IQE creates are grown as crystals in a process called epitaxy and they underpin the compound semiconductors used in smartphone cameras and sensing devices. Compound semiconductors combine two or more elements to create a compound with unique capabilities, beyond the traditional silicon used to make simpler microchips. Although it never says so publicly, IQE is understood to be a key enabler of Apple’s facial recognition technology.
Semiconductors are the brains of modern electronics, used in everything from mobile phones to wind turbines. Shortages during the pandemic forced factories to close and led to long waits for laptops, raising awareness of their importance.
The company has launched a new product that is used within artificial intelligence data centres, a significant growth area as the hype around the technology shows no sign of abating.
Americo Lemos, 57, IQE’s chief executive, said that “AI and “gen AI in particular” was one of the big trends driving growth. He also flagged growth in demand for components used in energy-intensive AI infrastructure, in which the company is also active.
“We expect this growth to continue in the new year as we pursue our maintain-and-diversify strategy. We are very well-positioned to take advantage of the unprecedented levels of investment coming into the semiconductor sector and capture the growth opportunities created by the technology megatrends of AI and the electric vehicle market,” Lemos said.
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The pandemic exposed the complexity and fragility of semiconductor supply chains, while China’s threats towards Taiwan, along with natural disasters in the country, the key global player in the sector, have raised concerns about their availability.
As a result, governments are investing to make themselves more self-reliant when it comes to microchips. America is investing $50 billion in its microchip industry. The European Union has earmarked more than €43 billion to foster its homegrown supplies.
Lemos is part of the UK government’s advisory panel to the industry and it has called for more support to be given to chip manufacturing.
