Shares of British Apple supplier plunge by 30pc as orders shrink

A BRITISH supplier to Apple has seen its share price plunge by a third after warning that orders were drying up.

Cardiff-based IQE, which also has factories in Newport and Milton Keynes, said its sales may be up to £30m lower than expected in the first half of this year as a result of weaker than anticipated demand.

The predicted revenue shortfall would be a drop of more than a third compared with what the company made in the same period last year.

IQE, whose microchip technology is used in the iphone’s facial recognition system, blamed a worldwide slowdown in demand for chips, citing an American Semiconductor Industry Association report that found global sales were down 18.5pc in January compared with a year earlier.

IQE’S update, which was its second profit warning in three months, sent shares plunging by almost a third in London, knocking £120m off the company’s market value. Demand for semiconductors surged during the pandemic as lockdowns prompted people to spend more money on physical goods.

Increased demand combined with manufacturing delays to create shortages.

Now, however, demand is waning as production issues ease and the global economy heads into a downturn.

Apple, which is one of IQE’S most important customers, last month reported its first quarterly drop in sales for three years, driven by weak demand for its iphones. The global semiconductor industry is worth more than £500bn and serves as “a fair proxy for worldwide economic activity”, according to Russ Mould, investment director at AJ Bell. IQE chief executive Americo Lemos said: “The current inventory cycle is temporary. Ours is an industry that has consistently demonstrated growth over many decades.

“We expect IQE to return to growth in the second half of the year and remain excited about the future.”

IQE’S woes are the latest blow for Britain’s tech industry, which is still reeling from Cambridge-headquartered computer chip designer Arm’s decision to seek a New York listing despite pleas from ministers to consider London.

IQE, which has facilities in the United States, has warned that it too could leave Britain in the absence of a credible semiconductor strategy.

The company was part of a delegation of British chip businesses that travelled to the US last week to hold talks with the White House, after Joe Biden launched a $53bn (£44bn) subsidy scheme for the semiconductor industry.

The British chip industry this week called on Rishi Sunak to announce a similar package of subsidies or risk seeing more businesses going overseas.