IQE Posts £6 Million First-Half Profit on AI Infrastructure Demand

Profit Turnaround Driven by AI

IQE Plc, a British manufacturer of chip components, posted an adjusted core profit of £6 million for the six months ending June 30, 2026. This marks a significant turnaround from the £0.4 million loss reported for the same period last year. The company attributes this performance to increased spending on AI infrastructure, data centres, and defence customers. IQE had previously raised its annual revenue guidance in July, reflecting this positive momentum.

Key Role in AI Supply Chain

The Wales-based firm supplies epitaxy for wafers, which are then used to create lasers deployed in data centres. This places IQE early in the AI data-centre supply chain. CEO Jutta Meier told Reuters that positive performance continued into the second half of this year, exceeding initial expectations.

Under Meier's leadership, IQE shifted from one-off orders to long-term agreements (LTAs) with major customers. These include chipmakers MACOM and Tower Semiconductor, alongside telecoms equipment maker Lumentum.

Capacity Expansion and Supply Challenges

Rising demand for indium phosphide, a crucial material for photonics in next-generation AI data centres, will prompt IQE to expand manufacturing capacity across its sites during the second half of this year. Meier noted some bottlenecks in indium phosphide substrate supply.

However, she indicated these issues were being managed through ongoing negotiations with various industry suppliers. Peel Hunt analyst Damindu Jayaweera views the move to LTAs as a fundamental change in IQE's revenue strategy, anticipating more such agreements.