IQE plc, a leading compound semiconductor wafer supplier, has announced a significant revision to its annual earnings and revenue forecasts, citing weakened demand in mobile handset markets. Concurrently, the company is exploring a potential sale, which has led to a substantial decline in its share price.

Headline: Chipmaker IQE Shares Decline Following Reduced Earnings Guidance Amidst Sale Consideration

Introduction

IQE plc, a prominent global supplier of compound semiconductor wafer products, announced on Monday, September 8, 2025, a significant downward revision to its annual earnings and revenue forecasts. This guidance cut, attributed primarily to a softening in demand within the mobile handset market, prompted a sharp decline in the company's share price, which fell over 11% to a more than 16-year low. Concurrently, IQE revealed it is now exploring a potential sale of the entire company, broadening the scope of its ongoing strategic review.

Revised Financial Outlook and Contributing Factors

The Cardiff-based chipmaker now anticipates its annual core earnings for 2025 to range between a loss of £5 million ($6.75 million) and a profit of £2 million. This represents a substantial reduction from its prior guidance, which projected a profit between £7.4 million and £10 million. In conjunction with the earnings downgrade, IQE also lowered its 2025 revenue forecast to between £90 million and £100 million, a considerable drop from its previous expectation of £115.1 million to £123 million. For context, IQE reported a core profit of £8.1 million on revenue of £118 million in 2024.

The company cited several factors for the revised outlook. Primarily, IQE highlighted persistent weakness in wireless markets, predominantly due to a slowdown in mobile handset sales, a trend expected to continue through 2025. Macroeconomic uncertainties have also led customers to deplete existing inventories rather than place new orders. Furthermore, contract delays in its wireless and photonics operations, alongside deferrals of federal funding cycles within the U.S. military and defense sectors, have pushed orders into 2026.

Market Reaction and Strategic Review Expansion

In response to the updated guidance, IQE's shares slid 11.2% in early trade, reaching 7.64 pence, marking a more than 16-year low for the Apple supplier, which provides wafer products for the iPhone's facial recognition sensor. The significant price drop underscores negative investor sentiment and concerns regarding the company's immediate financial performance and the broader health of its core markets.

Amidst these challenges, IQE has significantly expanded its strategic review. Initially focused on options for its Taiwan operations, including a potential sale, the review now encompasses a potential sale of the entire company. IQE indicated it has received an approach from an undisclosed party regarding a possible acquisition and is currently progressing negotiations with multiple parties for the sale of its Taiwan facilities. The proceeds from a potential sale of its Taiwan operations are intended to repay its revolving credit facility and convertible loan notes, while also providing capital for investment in core operations.

Broader Industry Context and Implications

IQE's revised outlook casts a shadow on the wider semiconductor sector and the mobile handset market. The company's struggles reinforce data indicating a slowdown in global smartphone sales. Research firm IDC reported that global smartphone shipments in Q2 2025 increased by only 1% year-on-year to 295.2 million units, reflecting significant weaknesses, particularly in the low-cost Android device segment due to economic pressures. This broader market softness suggests potential challenges for other companies within the technology supply chain heavily reliant on consumer electronics demand.

The deferral of orders linked to U.S. military and defense funding cycles also highlights potential wider economic or policy-related impacts on industries dependent on government contracts. IQE's strategic maneuvers, including exploring a full company sale and moving some production to the U.S. to mitigate the impact of tariffs, indicate a proactive, albeit reactive, approach to navigating a difficult market environment. Its reliance on a major customer like Apple and the mobile market, in general, makes it particularly susceptible to fluctuations in consumer demand and macroeconomic headwinds.

Looking Ahead

Investors will closely monitor IQE's upcoming interim results, scheduled for September 23, 2025, for further insights into the company's financial health and operational performance. The progress of the strategic review, including any developments regarding a potential sale of the company or its Taiwan operations, will also be a key determinant of future share price movements. The prevailing conditions in the global mobile handset market and broader macroeconomic trends will continue to shape the outlook for IQE and the wider semiconductor industry in the coming months.