Analysts believe that advanced semiconductor wafers designer IQE (IQE:AIM) will supply technology in the soon to launch iPhone 8. As flagged by Shares a month ago, this could have huge ramifications for the company’s future earnings.

‘We have wondered previously whether IQE may be part of the supply chain for the new iPhone,’ explains Canaccord’s Paul Morland. The company’s announcement of a ‘mass-market ramp for VCSEL wafers marks an inflection point in the commercialisation of this technology,’ appears to effectively confirm this.

VCSEL means vertical cavity surface-emitting laser technology, and area in which IQE is thought to be a world leader. The technology looks likely to be used in state-of-the-art 3D sensing and gesture recognition functionality.

Optimistic forecasts seen by Shares imply the potential for a three to four-fold jump in current 3.7p to 3.8p of earnings per share (EPS) next year to 31 December 2018. IQE is sensibly playing down potential hype.

‘Management guidance is for modest EPS upgrades to full year 2018 although we believe that the 10th anniversary iPhone opportunity alone could deliver 40%-plus upgrades,’ says N+1 Singer analyst Oliver Knott. That’s still a long way short of Peel Hunt’s best case scenario calculations.

A September launch looks likely for the new Apple smartphone handset, according to respected gadgets website Techradar and other tech sources. IQE shares have advanced upwards of 27% in little more than a week to 107.5p.

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