IN Brief:
- IQE increased H1 revenue 43% to £64.6 million, with photonics growing 45% and wireless 40%.
- Existing production tooling will be converted to increase indium phosphide capacity for AI and data-centre demand.
- Qualification work spans optical interconnects, GaN power epitaxy, RF infrastructure, infrared sensing, and advanced displays.
IQE increased first-half revenue by 43% to £64.6 million as demand strengthened across compound-semiconductor markets including AI data-centre infrastructure, wireless communications, advanced sensing, and defence. Photonics revenue rose 45% year on year to £38.5 million, while wireless increased 40% to £26.0 million, shifting more of the group’s sales mix towards higher-growth optical applications.
Adjusted EBITDA improved to £6.0 million from a £0.4 million loss on the same measure a year earlier. IQE attributed the improvement to the higher revenue base, better manufacturing-asset utilisation, and a more favourable product mix, while cash and cash equivalents stood at £41.6 million at the end of June. The operating figures give the latest demand signals more weight because the group is already changing how existing production equipment is allocated.
Indium phosphide sits at the centre of that adjustment. IQE plans to convert existing tooling during the second half to increase InP capacity for AI and data-centre markets, where it says strong demand is driving volume growth. The company is also qualifying GaAs-based optical-interconnect technologies, developing and sampling GaN-on-silicon microLED epitaxy with hyperscaler-facing partners, and qualifying GaN-on-silicon power epitaxy for high-efficiency data-centre power supplies.
Those programmes put several compound-semiconductor material systems into the same infrastructure build-out. InP is widely used for high-speed optical functions, GaAs remains important across photonics and RF devices, and GaN supports high-power and high-frequency electronics. IQE sits upstream of the finished laser, transceiver, RF front end, or power converter, so qualification and wafer demand can show where device makers are preparing for higher production volumes before complete systems reach the market.
Recent commercial activity provides a practical example. IQE has also agreed to supply six-inch GaAs epiwafers for Quintessent’s quantum-dot laser customer-sampling programme, extending a long-running materials relationship as that optical technology progresses through external evaluation. The interim results say a high volume of supply agreements signed after IQE’s strategic review is improving order visibility and supporting better use of manufacturing assets.
Photonics growth is not confined to data centres. IQE reports funding releases for certain US military and defence programmes, additional GaN RF qualifications across terrestrial, satellite, low-Earth-orbit, and defence radar platforms, and a broader infrared customer base with production orders and qualification work in new geographies. Wireless activity remains substantial alongside that growth, with GaN-on-SiC qualifications for mobile base stations and HBT technology being extended into high-frequency connectivity applications including Wi-Fi 7.
The mix of qualification stages also limits how directly revenue growth can be translated into future device volumes. Sampling, design-in, qualification, and full-rate production represent different levels of customer commitment, and compound-semiconductor programmes can spend long periods between them. IQE’s interim statement separates those stages across its markets, with some infrared products already at full-rate production while several GaN and optical-interconnect programmes remain in qualification or sampling.
Manufacturing utilisation is important in epitaxy because MOCVD and related production tools carry high fixed costs and have to remain tightly controlled across different material structures and customer specifications. Higher loading can improve economics, but converting existing tools towards InP also requires disciplined qualification if the same asset base is serving several end markets. Wafer uniformity, defect control, repeatability between runs, and customer-specific process windows remain the factors that determine whether demand growth translates into profitable volume rather than more development work.
IQE expects full-year revenue growth above 30% and low-teens millions of pounds in adjusted EBITDA, while also targeting a move from AIM to the London Stock Exchange’s Main Market in the first half of 2027. The nearer engineering milestone is the H2 capacity conversion: additional InP output has to be brought online while GaAs, GaN, infrared, and wireless qualification programmes continue. That balance will show how much of the current compound-semiconductor demand can be absorbed through better utilisation before further capacity investment becomes necessary.
