IQE PLC (LON:IQE) said it is confident in the opportunities arising from the global 5G rollouts but interim results are expected to remain flat.
The supplier of advanced wafer products and material solutions to the semiconductor industry said revenues for Wireless GaAs epiwafers are strong due to continued 5G handset market penetration and increased GaAs content.
In addition, demand for 3D sensing, advanced sensing applications and communications products continues to remain positive, although first-half revenues of GaN on SiC are expected to be lower than last year because of lower market estimates for mMIMO deployment in Asia.
The group expects revenue and adjusted underlying earnings (EBITDA) in the first half of 2021 to be similar to the first half of 2020.
Capital expenditure is expected to come in at £20-30mln as the manufacturer resumes investment in capacity for specific growth platforms, including three new reactors in Taiwan for further growth in 2022.
Capitalisation of development costs are expected to be £7-10mln for the full year as IQE continues to invest in future products to meet anticipated growing demand for compound semiconductors driven by the macro trends of 5G and connected devices.
In the year to December 31, revenue climbed 27% to a record £178mln driven by the start of the 5G mega-cycle while there were no interruptions to production despite the pandemic.
Loss narrowed 92% to £3mln as a result of exceptional impairment charges and legal costs reported at the half year, offset by the proceeds from the settlement of a legal dispute resolved in IQE’s favour.
Cash at period-end was £2mln from a £16mln debt position the year before.
IQE is also looking for a new chief executive so the current boss, Drew Nelson, can transition to becoming a board member with the title of president.
“With tailwinds now well-established, we remain convinced that the market underappreciates IQE's strategic value,” analysts at house broker Peel Hunt commented.
Shares slipped 6% to 68.15p on Thursday morning.