IQE reported adjusted profit before tax rose 18% to £24.3m for the year to the end of December, from £20.6m the previous year.
Total revenue rose 16.4% to £154.5m from £132.7m driven by strong wafer sales which helped to offset license income weakness.
Wafer sales - representing 99% of revenue - were up 21% to £152.6m driven by Photonics, where sales were up 109% to £47.6m. License income - representing 1% of revenue - fell 71.9% to £1.9m from £6.7m.
Adjusted fully diluted EPS increased by 16.3% to 3.4p.
IQE said that after a significant ramp in production during the second-half of 2017, the current financial year has started in line with expectations. The outlook for the full year and beyond is for continuing strong growth.
Dr Drew Nelson, IQE Chief Executive, said: 'Photonics continues to be the star performer with 109% year on year growth in sales, and H2 sales up more than 160% over prior year H2.This substantial growth is largely being driven by VCSEL products for mass market consumer applications that ramped through H2 of 2017. The depth and breadth of customer engagements in Photonics provides a solid platform for continuing strong growth with several new product launches forecast over the next 12-18 months for multiple OEMs.'
At 8:29am: (LON:IQE) IQE PLC share price was -1p at 141.6p