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(Alliance News) - Shares in IQE PLC plunged early Friday, after the smartphone chip maker warned that annual revenue will be lower than market estimates due to order delays resulting from US ban on Chinese smartphones and consumer electronics manufacturer Huawei Technologies Co Ltd.
IQE shares were trading 37% lower at 44.86 pence each, valuing the company at GBP354.73 million.
Drew Nelson, chief executive officer of IQE, said: "These are unprecedented times for the global semiconductor industry as geo-political conditions affect interconnected global supply chains. It is now clear that the impact of Huawei's addition to the US Bureau of Industry and Security's Entity List is having far-reaching and long-lasting impacts on global supply chains."
"This is a matter outside of IQE's control but we have responded swiftly to leverage our breadth of relationships and to pursue new sales opportunities," Nelson added.
The British semiconductor company said this is a larger impact than the previously guided risk related specifically to Huawei, due to the far-reaching impacts on other companies and supply chains that are now becoming evident. In May, IQE said its maximum risk exposure to the Huawei blacklist was less than 5% of total 2019 annual revenue guidance.
IQE now expects to deliver revenue in the range of GBP140 million to GBP160 million for 2019, compared with consensus estimate of GBP175 million. It expects to remain profitable in 2019 but with adjusted operating profit margin significantly below the previous guidance of over 10%.
The company said is taking steps to reduce costs and avoid non-critical capital expenditure
For the first half of 2019, the company anticipates to deliver revenue of GBP65 million to GBP68 million, versus GBP68 million consensus, amid a weak smartphone handset market and reduction in Indium Phosphide laser revenue for the datacom market due to a customer specific issue outside of the company's control.
IQE said it has recently received a reduction in forecasts from a number of chip customers which would impact revenue for the second half of 2019.
The company remains cautiously optimistic about growth opportunities for 2020 and expects to regain momentum due to 5G rollout and connected devices to regain momentum.
