Facing supply glut for chips, Apple-supplier IQE targets Asian and AI markets

British chip components maker IQE said on Tuesday it was focussed on penetrating Asian markets and growth opportunities from the artificial intelligence (AI) space as it forecast a slower-than-anticipated recovery in the chip industry this year.

Shares in IQE, which makes "epi-wafers", a type of advanced material used in products from laser hair removal to facial recognition sensors in iPhones, fell 4% after it also swung to a half-yearly loss hurt by lower sales and a supply glut.

"Some wireless markets are now bouncing back, and we have secured new design wins with multiple customers to deliver wireless products and Wi-Fi products into China market and India market for smartphones, which are very large markets for us to tap into," CEO Americo Lemos told Reuters in an interview.


The company, which is exploring diversification, said it also projected a "rebound on the data centre demands that is led by the growth of AI applications."

IQE offers GaN Power electronics which aims to serve power hungry AI infrastructure as the likes of generative AI ChatGPT consumes a lot more energy.

"We continue to believe in a more central role for IQE, with demand for greater performance and power efficiencies rising as AI permeates the world," brokerage Peel Hunt said in a note earlier this month.

Cardiff-based IQE is struggling with an inventory build-up, but expects improvements in supply-chain and a recovery in customer demand next year.

All the major markets for chips - smartphones, personal computers and data centres - have shrunk this year, as both corporate customers and consumers scale back spending amid a weak global economy, high inflation and rising interest rates.

The company's posted a core loss of 5.7 million pounds ($7.13 million) for the six months ended June 30, compared with a core profit of 12.3 million pounds last year.

Still, the Apple supplier said it expected adjusted core earnings to be profitable for 2023, adding that it saw double-digit revenue growth in the second half of 2023, compared to the first half.