(Sharecast News) - Semiconductor materials supplier IQE upgraded its full-year guidance on Tuesday, reporting that after its record first half revenue performance, trading in the second half had continued with positive momentum in both its wireless and photonics business units.
The AIM-traded firm said that was evidenced by the receipt of its largest military and defence sector purchase order to date from a major US customer, for both infrared and high-performance radiofrequency applications.
With a combined value of more than $10m, the order would be deliverable over the next nine months, the board said.
In the wireless business unit, IQE reported "strong" year-on-year growth in 2020 so far, driven by demand for GaAs wafers for 5G handset power amplifiers, fuelled by growing end-market demand for '5G-ready' smartphones.
It was also driven by sales of GaN on SiC wafers for 5G infrastructure related to initial deployments of 5G base stations, and sales of high-performance GaN on SiC wafers for military radiofrequency applications.
In the photonics business unit, it also reported "strong" year-on-year growth, underpinned by consistently high demand for GaAs VCSEL wafers for 3D sensing applications.
IQE said it had retained a "market-leading position" in 3D sensing epitaxy, and had been central to new applications being launched for that technology in its existing supply chains.
Sales of high-performance GaSb wafers for military and defence infrared applications was also part of its photonics performance.
Looking at the full year ending 31 December, IQE said it was expecting revenues to be at least £170m, exceeding its previous guidance of at least £165m provided at the interim results.
That would equate to full-year revenue growth of more than 20%.
Its board said it also anticipated delivering an adjusted operating profit in the mid-single-digit millions of pounds sterling.
IQE said that, wth a reduction in capital expenditure in 2020, along with a positive trading position and continued focus on cost control, net debt was expected to be in the low-single-digit millions of pounds.
That, the board said, would represent a "significant strengthening" in its balance sheet position since the prior year-end balance of £16m net debt.
The group said its forecast underlying demand for the technologies that its products enabled would remain "strong" heading into 2021.
In particular, it was expecting demand for 5G-related products - both handset and infrastructure - would continue to grow in the coming years as the "mega-replacement cycle" of 5G deployments gathered pace globally.
It said that in addition, IQE had a "leading portfolio" of photonics products for 3D sensing and other applications, making it "well-positioned" for growth.
"We are delighted to be reporting such a strong all-round financial performance, with anticipated revenue growth of over 20% for the full year, despite the ongoing uncertainty in the external environment," said chief executive officer Dr Drew Nelson.
"I am exceptionally proud of the whole IQE team whose dedication and commitment has enabled us to operate without interruption throughout this period."
At 1214 GMT, shares in IQE were up 4.8% at 63.3p.