IQE PLC (AIM:IQE) shares plunged 15% after it warned on profits and said it may raise £15 million from its largest shareholder as it carries out a strategic review, including potentially putting itself up for sale.
The compound semiconductor wafer supplier said that revenue for 2024 is expected to be "broadly flat" at around £115 million and that underlying profit (adjusted EBITDA) was expected to come in at roughly £5 million, suggesting a lossmaking second half after a £6.6 million EBITDA was reported for the first half of the year.
Recovery in key sectors of the semiconductor market is continuing to prove slower than expected, the Wales-based firm said, driven by weak consumer demand in end markets.
New executive chair Mark Cubitt, who took the role last month when IQE parted ways with previous boss Americo Lemos, said: "The impact of the slow pace of recovery in the semiconductor industry can be seen across the sector and is reflected in our revenue expectations for FY24."
He said a strategic review was needed, including an assessment of how to proceed with the IPO of its Taiwan operations, to "ensure we have a strong capital base to continue investing in our core business and support IQE's long-term strategy".
Cubitt and other directors said IQE had a "leading position" in providing advanced compound semiconductors to big customers in several markets but "believes there is significant value in IQE that is not currently reflected in its market capitalisation" of just over £100 million.
Part of the strategic review will look at the company's asset base to see what non-core elements could be sold off and what costs could be cut, with the proposed Taiwan IPO broaden out to include "all strategic options, including a full sale".
Talks are ongoing with Swiss financial group, Lombard Odier, the company's largest shareholder, which has offered to lend up to £15 million via a convertible loan note with a conversion price of 15p per share, versus the last close price of 10.68p.
The AIM-listed shares fell to 9.05p early on Monday, down around 60% so far this year.
** Update: adds share price **