IQE, one of Wales' leading technology firms, has reported strong trading momentum and expects revenues to grow by more than 20% this year after completing an £81m fundraise. The Cardiff-based company, listed on the Alternative Investment Market, is a global supplier of compound semiconductor wafer products and advanced material solutions.
Strong demand across core segments
The business, which also operates in the US and Taiwan, said improved trading in the second half of 2025 has continued into 2026. For the full year 2025, IQE reported a 17.6% fall in revenues to £97.3m and pre-tax losses of £37m. However, in an update to the City, it stated that trading in the first quarter of 2026 was in line with management expectations, with strong demand across all core segments.
In particular, IQE is experiencing accelerated demand for its indium phosphide (InP) solutions, which support optical photonics products for data centre and AI infrastructure. The company expects this to be a material growth driver through 2026 and beyond.
Aerospace, defence, and consumer markets also strong
IQE, a key player in the growing compound semiconductor cluster in south Wales, is also seeing ongoing strength in aerospace and defence markets, as well as VCSEL (vertical-cavity surface-emitting laser) and wireless products supporting the consumer smartphone industry.
Revenue for 2026 is expected to exceed 20% year-on-year, with strong order book visibility into the second half of the year. This is expected to result in a high-single digit to low double-digit adjusted EBITDA position.
£81m fundraise completed
Following the conclusion of a strategic review, IQE has completed an £81m fundraise. The net proceeds will be used to repay an existing revolving credit facility with HSBC Bank, as well as supporting working capital requirements and ongoing strategic investment.
The fundraise includes a £45m strategic investment from US tech giant MACOM Technology Solutions Inc, comprising £30m of equity and £15m in new non-interest bearing convertible loan notes. IQE and MACOM have also entered into long-term supply agreements.
The remainder of the fundraise consists of a £23m redemption and reinvestment of convertible loan notes by existing noteholders, as well as a £13m placing and retail offer. IQE will receive net cash inflows of £27.9m.
The company is also in the process of appointing Robert Dennehy, MACOM's chief operating officer, and David O'Carroll, MACOM's vice president, to its board as non-executive directors.
CEO comments
Jutta Meier, chief executive of IQE, said: "We were encouraged to see market conditions improve in the second half of the year. This reflected a positive trajectory in key sectors including photonics for AI and data centres, aerospace and defence, and wireless products for consumer electronics.
"The £81m fundraise from key partners is a transformational investment for IQE, giving us the balance sheet strength to invest in our future growth, while maintaining our global asset base.
"IQE is uniquely positioned as a critical enabler of the world's fastest-growing technology ecosystems. In particular, accelerating demand for our indium phosphide (InP) solutions supporting data centre and AI markets is expected to be a material growth driver throughout 2026 and beyond.
"Taken together, a stronger IQE, coupled with favourable market conditions directly benefitting the business, gives me great confidence for the future."
Broker note
In a broker's note, Panmure Liberum said: "IQE results (2025) are in line with expectations, as is guidance for FY26E. The significant investment, with MACOM becoming a strategic investor, has left IQE’s balance sheet in the strongest position for years.
"MACOM is a long-term lead customer. IQE is well placed to play on the AI, space and defence themes. Generating positive margins and cash flow through the cycle is materially more likely now. We would expect to see further long-term agreements signed, which supports this argument.
"We upgrade our target (share) price to 50p, reflecting increased confidence in the mid to long term outlook for IQE and retain a hold rating."
