$IQE has unfortunately not been performing well re

2026.07.16 08:55

$IQE has unfortunately not been performing well recently.

However, we've only had net-positive news since May:

- $Tower Semicon(TSEM.US) multi year InP epiwafer agreement in June w/ minimum purchase commitments from year two

- $14M multi year PO from a "strategic global technology leader" for AI/datacentre applications this week

- $Macom Tech(MTSI.US) board involvement after anchoring a £81M raise to strengthen balance sheet

That said, it does seem like IQE is simply resetting (similar to other high beta names like $SIVE) after going up parabolically in a few months.

And Chinese export curbs on gallium + InP feedstock are inflating input costs with management also saying that they're sharing that pain with customers.

I'm also looking at the fact that their balance sheet almost ruined them a few years ago - which is now solved thanks to £45M from MACOM as a strategic investor tied to LTAs.

IQE is one of the only Western epi houses that can supply InP epiwafers at a scale that actually matters.

And InP sits under every optical interconnect going into datacentres.

Tower didn't sign a multi year supply deal and settle a long standing patent dispute in the process because it had alternative routes to source supply...

So currently, you've got:

1. A repaired balance sheet.

2. An anchored strategic partner w/ Macom.

3. Contracted InP volumes.

4. An option on photonics too.

However, risks are definitely real and please do not act on my words alone...

They've had execution issues in the past e.g. too much internal resource in their wireless segment which has been dying a slow death over the past couple years. (They're correcting that now just by going from their investor decks).

Plus of course a long dilution history. And China risks impacting input costs.

Drawdowns like the one we're in currently are all part of the game.

Where highly volatile businesses = highly volatile returns.