IQE shares drop as semiconductor maker warns of slowdown in demand

IQE shares fell nearly a fifth today after the semiconductor wafer maker warned of a slowdown in demand from an oversupplied chip industry.

The AIM-listed group makes the wafers, which are then used as the basis for the semiconductors vital to the production of products such as smartphones – including Apple iPhones – and mobile network infrastructure.

After being hit by supply chain issues during the pandemic, companies like IQE and the wider chip industry are grappling with a slowing global economy that has slashed semiconductor prices and curbed demand for smartphones.

The Cardiff-based company told investors that “it expects some destocking in the broader semiconductor industry, which could hurt demand from its existing customers in the first half of 2023.

While revenues for 2022 are expected to be 8 per cent higher than the previous year at £154 million, this is only due to the weakness of the British pound.

In fact, revenue is expected to remain flat at constant currency, the company said.

IQE Shares fell 18 percent in afternoon trading Monday to 49.20p.

They’re up about 50 percent in the last year, but are down about 60 percent in five years.

Some analysts have singled out IQE and other semiconductor companies as stocks to rely on in a recession as the industry is expected to continue to grow.

IQE said in a trading update ahead of its full-year results, “Group trading in 2022 was largely resilient in the challenging macro environment.”

“In the first half of 2023, the Group expects some de-stocking in the wider industry, which could impact demand from existing customers, but remains confident in its diversification strategy and longer-term growth objectives as outlined at the Capital Markets Day last November.

“Strong commercial progress has been made in 2022 to lay the foundation of this strategy and management is excited about the pipeline of opportunities being developed for 2023 and beyond.”