Summary

  • IQE reported £64.6m of first-half revenue, up from £45.3m, and £6.0m of adjusted EBITDA after a £0.4m loss on that measure a year earlier.
  • The company’s highlighted £1.2m of cash generated from operations was below last year’s £3.6m and precedes interest and tax. Its full cash-flow statement records £6.4m used in operating activities after those payments.
  • Cash and equivalents reached £41.6m at June’s end, including £3.7m of restricted cash. The May fundraising and debt refinancing, rather than operating cash generation, explain most of the balance-sheet change.
  • A Tower Semiconductor InP supply agreement includes minimum purchases; conversion of existing tools to additional InP capacity is still planned for H2. Neither disclosure gives the resulting wafer volumes, yields or cash receipts.

The most flattering number in IQE’s interim results is the cash balance: £41.6m at 30 June, against £15.7m at the end of 2025. It is a genuine improvement in liquidity. It is also a poor substitute for asking how the wafer business paid for itself during those six months.

Revenue rose 43% to £64.6m, and adjusted EBITDA moved from a £0.4m loss to a £6.0m profit. Photonics sales grew to £38.5m from £26.6m, while wireless sales reached £26.0m from £18.6m. Better factory utilisation and a richer photonics mix helped margin. The company attributes photonics growth to both releases of funding for certain US defence programmes and AI and data-centre demand. It gives no separate InP or AI revenue figure, so the entire £11.9m photonics increase cannot be assigned to optical links for AI clusters.

Three cash measures, three answers

IQE’s results summary calls £1.2m its reported net cash flow from operations, down from £3.6m. In the full cash-flow statement, that £1.195m is “cash generated from operations”: the amount before interest and tax. Adjusted cash generated from operations was £4.680m, versus £6.190m a year earlier. Both figures show that adjusted profit and operating cash did not rise together.

The statement then records £7.791m of interest paid, £0.211m received and £0.050m of tax paid. After those items, net cash used in operating activities was £6.435m, compared with £1.204m generated in the first half of 2025. The distinction matters: a reader who stops at the highlighted £1.2m misses the cash consumed after debt service. IQE also reported a £12.6m pre-tax loss, narrower than £18.3m last year; that accounting result is a fourth, different measure.

Working capital absorbed about £4.0m. Inventories increased by £2.285m and trade and other receivables by £5.133m; a £3.658m rise in payables offset part of that use, and provisions fell by £0.267m. Higher sales can require more stock and more customer credit before collection, but the accounts do not identify which portion, if any, is tied to InP rather than other product lines. IQE also cites £2.4m of restructuring and strategic-review costs in its explanation of reported cash generation.

A funded balance sheet is a separate achievement

The £41.6m at period end followed the fundraising completed in May. Its £81m headline included roughly £23m of existing convertible-note proceeds redeemed and reinvested, as the April terms specify. The cash-flow statement records £66.8m from new shares and £15.0m from new convertible notes, alongside £26.1m of bank-debt repayment and £17.8m of old-note redemption. Financing activities supplied a net £34.4m, compared with the £6.4m operating outflow and £2.1m used in investing activities.

There are two further limits to the simple “cash-rich” description. The £41.6m includes £3.655m of restricted cash. IQE’s £30.2m adjusted net cash excludes lease liabilities; including them, its debt note reports £12.3m of net debt. “Bank-debt free” describes the repaid bank facility, not the absence of every financing or lease obligation. None of this erases the value of the capital raise. It identifies what the raise achieved: time and liquidity for an operating test, rather than proof that the test has been passed.

From orders to accepted wafers

There is real commercial evidence. The Tower Semiconductor agreement sets a first-year minimum purchase commitment, a reciprocal IQE supply commitment and subsequent minimum volumes for InP epiwafers used in optical connectivity. Public terms do not quantify the volumes, pricing, shipments or collections. IQE separately announced a US$14m multi-year production order for products made at Newport for high-performance storage applications in AI and data centres. The release mentions InP optical communications as another capability; it does not identify that US$14m order as InP optical wafer revenue.

IQE says it will convert existing tooling during H2 to add InP capacity. That is an operational commitment with stages still to demonstrate: a conversion schedule, qualification, stable yield, accepted deliveries, billing and collection. Its September Quintessent purchase agreement concerns GaAs quantum-dot-laser wafers moving through customer sampling, another reason to resist treating all optical activity as completed InP volume. The company guides to more than 30% full-year revenue growth and low-teens millions of pounds of adjusted EBITDA. Those are forecasts, not receipts from the unreported capacity conversion.

The first half therefore shows a business with firmer demand, higher sales and a stronger funded balance sheet. The open question is whether its InP line changes and customer commitments turn that position into repeatable cash after working-capital needs and financing costs. The interim accounts let readers see the gap; they do not yet close it.

Sources

IQE interim results · Full cash-flow statement · Fundraising completion · Tower supply agreement · July production order