IQE (LSE:IQE) reported full-year 2025 revenue of £97.3 million, representing a decline of 17.6% compared with the previous year, as weaker smartphone demand and wider macroeconomic uncertainty weighed on its wireless division. In contrast, photonics revenue increased 15%, driven by stronger demand from defence applications and AI-focused data-centre infrastructure.
Adjusted EBITDA declined to £3.2 million during the period, although the company improved operating cash flow and reduced capital expenditure as part of ongoing efficiency measures. IQE also continued investing in gallium nitride (GaN) and microLED production capabilities while further optimising its global manufacturing operations.
Strategic Investment Reshapes Financial Position
A recently completed £81 million fundraising has significantly strengthened the company’s balance sheet. The financing included a £45 million strategic investment alongside long-term supply agreements with MACOM.
Following completion of the transaction, IQE repaid its revolving credit facility and reported net cash inflows of £27.9 million, improving financial flexibility and liquidity.
Management said the strengthened balance sheet will support future growth initiatives while allowing the business to capitalise on increasing demand across high-growth semiconductor markets.
AI and Data-Centre Demand Drives 2026 Momentum
The company reported strong trading momentum entering 2026, with accelerating demand for indium phosphide (InP) photonics products used in AI infrastructure and data-centre applications. IQE also highlighted solid order activity from aerospace, defence and smartphone customers.
Based on current trading conditions, management expects revenue growth of more than 20% in 2026 and anticipates a return to high single-digit to low double-digit EBITDA margins as operational leverage improves.
Financial Challenges Still Influence Valuation
The company’s outlook is held down primarily by weak financial performance (negative profitability and deteriorating cash flow) and a loss-making valuation profile (negative P/E). This is partially offset by strong recent technical momentum, with the price trading above key moving averages and positive MACD.
More about IQE plc
IQE plc, based in Cardiff, is a leading global supplier of compound semiconductor wafer products and advanced material solutions. The group focuses on photonics, wireless, power and display applications, serving fast-growing markets such as AI-driven data centres, aerospace and defence, consumer smartphones, automotive sensing and emerging microLED displays.
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