**Summary of IQE PLC H1 2025 Interim Results**
**Financial Overview**
**Revenue Decline** Revenue for H1 2025 decreased to £45.3 million, down from £66.0 million in H1 2024, primarily due to a 52% drop in wireless revenue (£18.6 million vs. £38.8 million) caused by customer inventory overhang, tariff uncertainty, and reduced consumer demand for mobile handsets. Photonics revenue remained relatively flat at £26.6 million.
**Losses** Adjusted loss before tax widened to £12.9 million (H1 2024: £7.2 million), and reported loss before tax increased to £23.5 million (H1 2024: £12.1 million). Adjusted EBITDA was negative at £0.4 million (H1 2024: £6.6 million).
**Cash Position** Reported net cash flow from operations improved to £3.6 million (H1 2024: -£2.6 million), aided by a £4.6 million working capital inflow. Cash and cash equivalents stood at £17.0 million, boosted by a £18.0 million Convertible Loan Note fundraise in March 2025.
**Debt** Adjusted net debt increased to £23.5 million (H1 2024: £17.0 million), with an undrawn £4.0 million balance on the Revolving Credit Facility.
**Operational Highlights**
**Cost Control** Implemented tight controls on discretionary spending, reduced SG&A costs, and maintained headcount after a 10% reduction in the prior year. Senior management agreed to a share swap in lieu of salary for H2 2025.
**Site Optimisation** Ceased manufacturing at the Silicon site in South Wales in Q1 2025, with full exit expected in Q4 2025.
**Business Segments**
**Connect** Secured Tier 1 customer design wins for AI and data center applications, launched a 6-inch foundry platform for Silicon Photonics, and expanded GaN RF radar solutions in satellite and defense sectors.
**Sense** Advanced customer qualifications for VCSELs in smartphones and diversified 3D Sensing products for AR/VR. Expanded Infrared solutions for defense and autonomous platforms.
**Power** Progressed joint development with X-FAB for automotive power customers and developed GaN on Si technology for sovereign supply chains.
**Display** Expanded GaN reactor capacity for 8-inch GaN on Si development and delivered 8-inch RGB epitaxy for microLED technologies.
**Strategic Review**
Announced expansion of the Strategic Review to include a potential sale of the Company, with early-stage expressions of interest received. Discussions are ongoing for the sale of the Taiwan operations, with proceeds expected to repay debt and invest in core operations.
**Outlook**
Revenue for FY 2025 is forecast between £90.0 million to £100.0 million, with adjusted EBITDA between -£5.0 million to £2.0 million. Market conditions are expected to improve in 2026 as inventory levels normalize.
Continued focus on efficiency initiatives to strengthen margins and cash generation.
**Key Risks**
Uncertain macroeconomic conditions, weak customer demand, and delays in federal funding for defense sectors.
Breach of minimum EBITDA and liquidity covenants in H1 2026, mitigated by planned asset divestments and ongoing discussions with HSBC Bank plc.
**Management Commentary**
CEO Jutta Meier acknowledged the challenging H1 performance but highlighted progress in innovation, particularly in GaN and microLED technologies. Expressed confidence in the diversification strategy and the Strategic Review process.
**Conclusion**
IQE PLC faces significant near-term challenges due to market headwinds and inventory adjustments but remains focused on long-term growth through innovation, cost control, and strategic divestments. The outcome of the Strategic Review and asset sales will be critical to improving liquidity and financial stability.