2025 Interim Results

Cardiff, UK
23 September 2025

H1 2025 Results

IQE plc (AIM: IQE, "IQE" or the "Group"), the leading global supplier of compound semiconductor wafer products and advanced material solutions, today announces its unaudited results for the six months ended 30 June 2025.

H1 2025 Financial Summary:

<sup>1. Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation and certain non-cash charges, non-operational items and significant infrequent items set out in Note 8 in the financial statements section.
2. Cash capital expenditure stated is Property, Plant and Equipment cash capex.
3. Adjusted net debt is calculated as cash less borrowings but excluding lease liabilities and fair value gains/losses on derivative instruments.</sup>

H1 2025 Financial Highlights:

• Revenue for H1 2025 decreased at £45.3m (H1 2024: £66.0m).
  • Wireless revenue of £18.6m (H1 2024: £38.8m) decreased 52% year-on-year reflecting slow demand due to the overhang of 2024 customer inventory builds, tariff uncertainty and softness in consumer purchasing of mobile handsets.
  • Photonics revenue of £26.6m (H1 2024: £26.8m) was broadly flat year-on-year reflecting strong performance in InP data communications for AI markets, partially offsetting funding delays in US military and defence Infrared markets.
• Adjusted LBITDA of (£0.4m) (H1 2024: £6.6m EBITDA), reflecting low operating leverage as a result of capacity underutilisation stemming from lower market demand.
• Reported operating loss of (£23.5m) (H1 2024: (£12.1m)).
• Reported net cashflow from operations of £3.6m (H1 2024: (£2.6m)) significantly increased year-on-year, reflecting careful cash management and a £4.6m working capital inflow.
• Cash capital expenditure (PP&E) of £1.0m (H1 2024: £5.0m) reflecting prudent investment into the Group’s GaN diversification and capacity expansion.
• Adjusted net debt of £23.5m (H1 2024: net debt of £17.0m) with an undrawn balance of $5.5m (£4.0m) on the Group’s Revolving Credit Facility as at 30 June 2025.
• Cash and cash equivalents of £17.0m as at 30 June 2025 following the £18.0m Convertible Loan Note fundraise in March 2025.
• Cost control and cash generation
  • Tight controls over discretionary expenditure in line with current trading environment
  • Continued reduction in SG&A spend while simultaneously strengthening operational capabilities
  • Maintained right-sized headcount following over 10% reduction in prior year
  • Asset optimisation including the sale of excess tools resulting from site consolidation
  • Share swap in lieu of salary agreed for senior management, taking effect in H2 2025
• Global site optimisation programme
  • Cessation of manufacturing operations at Silicon site in South Wales in Q1 2025 with exit from the site anticipated in Q4 2025

Business update:

• Connect
  
  Strength in InP reflects proliferation of AI and demands for greater connectivity, speed and functionality.
  • Secured multiple Tier 1 customer design wins for laser and detector products enabling next-generation AI and hyperscale data centre infrastructure, while simultaneously launching 6-inch foundry platform to serve future demand for Silicon Photonics
  • New platform adoption of GaN RF radar solutions in satellite communications and military and defence sectors, strengthening IQE’s position in mission-critical markets and supporting the build out of satellite internet constellations
  • Integration of higher-performance HBTs in leading smartphones, delivering enhanced AI capabilities and battery performance
  • Customer partnership to develop microLEDs enabling high density, power efficient datacom interconnects
• Sense
  
  Continued demand for sensing products in consumer mobile markets with expansion of Infrared products across critical defence platforms.
  
  • Advanced stage customer qualification for higher-performance VCSELs powering the next-generation of 3D Sensing in future generations of smartphones
  • Diversification of 3D Sensing product portfolio with multi-junction VCSELs, enabling precision gesture recognition for AR/VR applications
  • Expansion of Infrared customer portfolio with next-generation long-wavelength solutions (LWIR) for autonomous sensing platforms
  • Delivery of first commercial orders for 6-inch GaSb epiwafers enabling large area sensor products for advanced imaging for space and satellite applications
• Power
  
  Strong development pipeline despite slower adoption of electric vehicle technology.
  
  • Progression of Joint Development Agreement with X-FAB, sampling underway with leading automotive Power customers
  • Continued development of GaN on Si technology to create sovereign supply chains for both US and European markets, leveraging IQE’s longstanding expertise in RF applications
  • Development of higher-voltage GaN (>1000 V) through government-funded programs for vertical GaN and GaN on sapphire, targeting automotive and radar markets
• Display
  
  Continuation of development partnership with consumer multinational in new display ecosystems targeting next-generation devices.
  
  • Expansion of GaN reactor capacity to support 8-inch GaN on Si development by consumer OEMs to enable cutting edge AR/VR displays
  • Delivering 8-inch RGB (red, green, blue) epitaxy for silicon integration, enabling high volume, cost-effective advanced microLED technologies

Strategic Review:

On 8 September, IQE announced the expansion of its ongoing Strategic Review to incorporate the potential sale of the Company and confirmed that it was already in receipt of an approach from a potential offeror. Additional early-stage expressions of interest have been received following the announcement. There can be no certainty either that an offer will be made nor as to the terms of any offer, if made.

In addition, IQE continues to advance discussions relating to the sale of the Group’s operations in Taiwan. Should the sale of Taiwan be concluded, it is expected that the proceeds from such sale will be used to fully repay the Group’s Revolving Credit Facility with HSBC Bank and the Convertible Loan Notes issued in March 2025, as well as providing IQE with cash to invest in its core operations.

The Board continues to be advised by Lazard on the full scope of the Strategic Review.

Current trading and outlook:

Uncertain macroeconomic conditions impacted trading in H1 2025, resulting in some end customer demand being fulfilled with their existing inventory. During this period, Wireless markets were affected by softness in mobile handset sales, and this is expected to persist through 2025. Additionally, delays to federal funding cycles in US military and defence sectors are resulting in the deferral of orders into 2026.

As previously announced, revenue for FY 2025 is expected to be between £90.0m to £100.0m, resulting in an adjusted EBITDA position of between £(5.0m) to £2.0m (the “IQE Profit Forecast”). Efficiency initiatives focused on cost structure and capacity utilisation are ongoing, with the aim of strengthening margins and cash generation.

The IQE Profit Forecast constitutes an ordinary course profit forecast for the purposes of Note 2(a) on Rule 28.1 of the Code. Accordingly, the appendix to this announcement contains the IQE directors’ confirmations required pursuant to Rule 28.1(c) of the Code.

The Group's banking facilities provided by HSBC Bank plc are subject to certain covenant tests. IQE has received a waiver from HSBC in relation to Q3 2025 EBITDA covenant testing. This is a reflection of the longstanding and supportive relationship with the lender. IQE is also engaged with stakeholders to improve both the Group’s near-term liquidity position and working capital cycle.

IQE’s robust and ever-growing customer pipeline, featuring Tier 1 consumer brands, underscores ongoing market demand for the Company’s products, with market conditions anticipated to improve in 2026 as existing inventory levels start to normalise. IQE is seeing strong organic growth in multiple areas, including VCSELs for next-generation smartphones, InP products for data centre and optical communication markets, microLED for AR/VR and GaN RF products.

Jutta Meier, Chief Executive Officer of IQE, commented:

“Our first half performance fell short of expectations, driven by a combination of market headwinds and the unwinding of customer inventory. Despite this, I remain encouraged by the progress we have made and our continued investment in innovation is yielding promising results. We have made significant development progress in areas that are critical to our long-term strategy, such as in GaN and microLED, and are poised to capitalise on the opportunities in these growing markets.

Looking ahead, our operational discipline supports IQE’s long-term vision centred on sustainable growth. This is underscored by our continued strong customer pipeline, which reinforces my confidence in our diversification strategy. Additionally, I am pleased to see the increasing level of interest in our Strategic Review, and I look forward to updating the market on the progress we are making in due course.”

Results Presentation:

IQE will present its H1 2025 Results via webcast at 8:30am BST today, 23 September 2025. If you would like to view this webcast, please register by using the below link and following the instructions:

https://brrmedia.news/IQE_HY25

Contacts:

IQE plc
+44 (0) 29 2083 9400
Mark Cubitt
Jutta Meier
Amy Barlow

Lazard (Financial Adviser)
+44 (0) 20 7187 2000
Cyrus Kapadia
Keiran Wilson
Alexander Fiallos

Peel Hunt (Nomad and Joint Broker)
+44 (0) 20 7418 8900
Ben Cryer
Kate Bannatyne
Adam Telling

Deutsche Numis (Joint Broker)
+44 (0) 20 7260 1000
Simon Willis
Hugo Rubinstein
Iqra Amin

Headland Consultancy (Financial PR)
+ 44 (0) 20 38054822
Andy Rivett-Carnac: +44 (0) 7968 997 365
Chloe Francklin: +44 (0)78 3497 4624

GLOSSARY

GaN – Gallium Nitride
GaSb – Gallium Antimonide
InP – Indium Phosphide

ABOUT IQE

http://iqep.com

IQE is the leading global supplier of advanced compound semiconductor wafers and materials solutions that enable a diverse range of applications across:

• Smart Connected Devices
• Communications Infrastructure
• Automotive and Industrial
• Aerospace and Security

As a scaled global epitaxy wafer manufacturer, IQE is uniquely positioned in this market which has high barriers to entry. IQE supplies the global market and is enabling customers to innovate at chip and OEM level. By leveraging the Group’s intellectual property portfolio including know-how and patents, it produces epitaxy wafers of superior quality, yield and unit economics.

IQE is headquartered in Cardiff UK, with employees across manufacturing locations in the UK, US and Taiwan, and is listed on the AIM Stock Exchange in London.