British semiconductor wafer manufacturer IQE has announced a strategic review of its assets, which may include a full sale of its Taiwan subsidiary, IQE Taiwan, as the company faces a slower-than-expected recovery in the electronics market. This comes as IQE projects flat revenue growth for 2024, expecting around £115 million ($145.27 million), matching 2023 figures. Adjusted EBITDA is anticipated to be at least £5 million, falling short of earlier analyst predictions.

The company's "epiwafers," widely used in Apple’s iPhone facial recognition sensors, are a key product, but the global semiconductor industry's sluggish rebound has impacted IQE's financial outlook. In July, IQE initially announced plans to take IQE Taiwan public through an IPO on the Taiwan Stock Exchange, with the intention of retaining control over the subsidiary. However, the company has now stated it is assessing all available options, including a full sale of the unit.

In light of the challenging market conditions, IQE's stock fell by 15% to 9.02 pence in early London trading following the announcement, bringing its year-to-date decline to around 54%. In response, IQE has engaged financial advisory firm Lazard to help explore strategic options, which may include expanding the IPO plans for its Taiwan operations or pursuing an outright sale to secure a stronger capital base.

IQE's interim CEO and CFO, Jutta Meier, highlighted the ongoing restructuring and business optimization efforts, emphasizing the need to adjust to the evolving market landscape. This comes after the unexpected departure of former CEO Americo Lemos in October 2024. The search for a new CEO is currently underway as the company navigates a challenging financial climate.

Mark Cubitt, IQE’s Executive Chair, acknowledged the broader struggles facing the semiconductor sector, stating, “The impact of the slow pace of recovery in the semiconductor industry can be seen across the sector and is reflected in our revenue expectations for FY24.” He added that the strategic review, including assessing options for IQE Taiwan, is crucial for supporting the company’s long-term growth strategy.

In addition to the review, IQE is negotiating a convertible loan note of up to $15 million with Lombard Odier, convertible at 15 pence per share. This move aims to provide additional financial flexibility as the company continues to navigate a difficult landscape marked by geopolitical tensions and supply chain security concerns, which have further complicated operations in the semiconductor industry.

IQE's announcement follows similar struggles reported by other industry players, such as Apple supplier Skyworks Solutions and chip manufacturer Qorvo, both of which recently posted weaker-than-expected results, underscoring the challenges facing the broader semiconductor sector.