One of Wales’ tech companies expects to see its revenues tumble this year due to a fall in demand in the semiconductor market.
IQE, which provides compound semiconductor wafer products and advanced material solutions to the global semiconductor industry, saw its shares drop 28.3% lower to 33.50p on Thursday morning after warning that a reduction in customer orders and forecasts is expected to result in a year-on-year decline of around £30m in reported revenues for the first half of 2023.
Last year it reported £86 million in revenues between January and June 2022. In an update on current trading, the London Stock Market-listed and Cardiff-headquartered firm said its management’s expectation for its 2022 financial results were still in line with its update given earlier this year.
However, since then the company has seen an acceleration of the trends anticipated, with weaker demand leading to inventory build-up throughout the supply chain. It said similar trends were evident across the industry, with the US Semiconductor Industry Association (SIA) reporting that global industry sales decreased in January 2023 - down 18.5% year-on-year.
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It comes as UK microchip firms call on the UK Government to invest “hundreds of millions” in the semiconductor sector to secure its future. Last month IQE warned that it might have to relocate abroad without more government support for the sector.
IQE added that the “near-term market softness” is expected to be temporary and a return to year-on-year growth is anticipated in the second half of this year, based on conversations with its existing customers and new opportunities in the pipeline.
“IQE continues to make positive progress towards the Group's strategy as set out at the November 2022 Capital Markets Day, diversifying into high-growth markets including Power Electronics and MicroLED,” the company said in the update.
“The Group has a strong pipeline of strategic and long-term partnerships and new business opportunities that will underpin growth in 2024 and beyond.”
Chief executive of IQE Americo Lemos, said: “The current inventory cycle is temporary. Ours is an industry that has consistently demonstrated growth over many decades. We expect IQE to return to growth in the second half of the year and remain excited about the future as we continue to execute our diversification strategy."
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