Complex supply chains and high fixed costs see analysts slash earnings hopes
Thursday 27 Jun 2019 Author: Steven Frazer

Analysts have slashed earnings forecasts by more than half for compound semiconductor wafer technology designer IQE (IQE:AIM). The Cardiff-based company last week warned of an escalating squeeze on orders as the fallout from the US ban on Huawei rumbles on.

This follows an increasingly sharp decline in smartphone handset volumes worldwide as the US and Chinese authorities lock horns over global trade and intellectual property rights.

Data from market researcher IHS Markit says smartphone display shipments plunged 20% sequentially during the first quarter of 2019, with further declines anticipated for the second and third quarters.

Peel Hunt analysts have slashed their earnings per share estimates for IQE by 53% for the full year to 31 December 2019, while Canaccord Genuity analysts went even further, cutting their own projections by 55%.

Shares in the company collapsed 25% to 53.8p on 21 June, their lowest in more than two years.

IQE is part of a complex semiconductor supply chain to smartphone and other electronics kit manufacturers, including providing laser-based technology widely believed to be used in iPhone face recognition technology.

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