IQE has secured an £81m investment package to support its growth plans, bringing a formal end to the strategic review launched by the Cardiff-headquartered semiconductor company in November 2024.
Investment details
The funding comprises three core components. US semiconductor manufacturer MACOM Technology Solutions is injecting £30m in equity and a further £15m in convertible loan notes, taking its total proposed investment to £45m. Existing convertible loan note holders are reinvesting £23m, while IQE has raised an additional £13m through a placing and retail offer priced at 19.8p per share.
The issue price represents a discount of approximately 58.4 per cent to IQE’s closing mid-market price on April 24. The share price reacted negatively to the announcement, falling below 40p after trading above 70p the previous week. By April 28, IQE shares were trading at 49.40p, with Wall Street analysts forecasting a further decline to an average 12-month target of 41.31 GBX.
The fundraise is subject to shareholder approval at a general meeting scheduled for May 15. Resolutions will be proposed to grant directors authority to allot ordinary shares and to issue equity securities for cash on a non-pre-emptive basis. Completion also requires MACOM to obtain prior clearance under the UK’s National Security and Investment Act 2021 and Italian foreign direct investment legislation. No part of the fundraising is being underwritten, with Peel Hunt LLP acting as sole bookrunner for the placing.
The company intends to use the proceeds to repay existing bank debt, redeem existing loan notes, strengthen its balance sheet and support investment in core technologies and long-term growth. Mark Cubitt, chair of IQE, said the fundraise “removes debt pressures and leaves the Group with a capital structure to enable future growth.” IQE’s most recent fiscal year reported an EBITDA of USD -1.39 million, though adjusted EBITDA improved significantly from £4.3m to £8.2m in FY 2024.
Strategic review and the MACOM deal
The strategic review, launched in November 2024, had explored a potential sale of the business. That did not materialise. Instead, the arrival of MACOM as a cornerstone investor marks a pivotal shift in IQE’s governance and commercial trajectory. Under the terms of the deal, MACOM will nominate two new members to IQE’s board, giving the US company direct influence over strategic direction.
MACOM, a leading supplier of analog semiconductor solutions for wireless and wireline applications, is also a longstanding customer of IQE. The two companies have entered into long-term supply agreements covering IQE’s epitaxial services across multiple technologies. Stephen Daly, chief executive of MACOM, said: “MACOM believes this transaction will allow IQE to realise its full potential in technology, operational execution and financial performance.”
MACOM’s total investment of £45m is intended to secure supply chain resilience and support its own growth strategy, which is driven by strong demand in 5G, AI data centres and defence programmes. The company reported record fiscal 2025 revenues of approximately $967m, a 32 per cent year-on-year increase, with net income of $48.8m in the first quarter of 2026. Its gross profit margin improved to 55.9 per cent in the same period.
Jutta Meier, IQE’s chief executive, described the transaction as “transformational for IQE”, adding: “The investment from MACOM and other existing shareholders will provide the balance sheet strength to allow us to capitalise on the opportunities in front of us, while maintaining our unique global footprint.”
Applications and technology focus
IQE is a global supplier of compound semiconductor wafer products and advanced material solutions. Founded in 1988 in Cardiff as Epitaxial Products International, the company now employs approximately 479 people and distributes its products across North America, Europe and Asia. Its epitaxial wafers are manufactured from materials including gallium arsenide (GaAs), gallium nitride (GaN), indium phosphide (InP) and silicon.
The company’s technologies enable applications across a diverse range of sectors: smart connected devices, communications infrastructure, AI and data centres, automotive and industrial, and aerospace and defence. IQE reports its business through three segments: Wireless, Photonics and CMOS++. Strategic focus areas include advancing GaN capacity in the US and UK, developing 200mm 650V enhancement/depletion mode capabilities, and scaling InP-based datacom technologies.
Revenue for FY 2024 reached £118.03m, a 2.41 per cent increase on the prior year, and the company expects more than 20 per cent year-on-year growth for FY 2026. IQE is seeing particularly strong demand for photonics products linked to AI-compute and data centre deployments, as well as VCSEL and wireless products for the consumer smartphone industry.
