IQE raises 2026 sales growth forecast above 30% on AI demand
The UK chipmaker upgraded its annual outlook as surging demand for optical components in artificial intelligence infrastructure and data centres drove first-half trading beyond expectations.
IQE has revised its 2026 revenue growth forecast upwards to above 30 per cent, up from a previous target of 20 per cent. The UK-based semiconductor wafer maker cited first-half trading that significantly exceeded management expectations across all of its core business segments. Announced on July 21, the guidance upgrade sets a minimum first-half revenue threshold of £64 million.
Optical demand drives upgrade
The primary catalyst for this upward revision is a rapid acceleration in demand for the company's Indium Phosphide solutions. These materials serve as a key component in optical photonic products used directly in AI infrastructure and data centres. Management stated that this elevated demand is not a temporary anomaly but a trajectory expected to persist through the remainder of the year.
For portfolio managers and sector analysts, the announcement provides concrete evidence that AI-related capital expenditure is actively filtering down the semiconductor supply chain. While market attention typically focuses on the largest chip designers, the physical limitations of data transfer within AI computing clusters require advanced optical connectivity. IQE’s revised growth target indicates the company is capturing a direct financial benefit from this underlying hardware expansion cycle.
Diversified revenue base
Crucially, the company’s performance is not solely reliant on the data centre build-out. The improved outlook is explicitly supported by sustained strength in the aerospace and defence markets. Simultaneously, robust demand for 3D sensing and wireless products is contributing to a broader revenue improvement, ensuring that the overall growth is not concentrated in a single end market.
On the profitability front, IQE guided for full-year core profit to reach the low-teens of millions of pounds. The immediate focus for the market will now shift to the margin implications of this changing revenue mix. When the company files its formal interim results, investors will analyse whether the surge in Indium Phosphide volumes is translating into stronger per-unit economics and meaningful operating leverage alongside the top-line growth.
