A quieter question than contract wins

IQE released only a routine total voting rights notice in the period before 3 November 2026, so this article steps back from recent customer agreements to examine something less visible: the shape of the Cardiff-based wafer maker's Balance Sheet after its strategic review and fundraising. (LSE:IQE) The source is the full interim results announcement for the six months to 30 June 2026, published on 7 September 2026, read alongside an October Warrant notice.

IQE grows epitaxial layers on compound semiconductor wafers, materials such as indium phosphide, gallium nitride and gallium arsenide that feed into optical links for data centres, wireless chips, sensing and defence systems. (LSE:IQE) It manufactures in the UK, US and Taiwan.

From net Debt to net cash

The twelve-month change is stark. (LSE:IQE) At 30 June 2025 IQE reported adjusted net debt of £23.5m. A year later it reported adjusted net cash of £30.2m, a measure that excludes Lease liabilities, with cash and equivalents of £41.6m. Bank borrowings, which stood at £26.8m at the end of 2025, had been eliminated by 30 June 2026.

The interim Equity statement shows net proceeds of £65.8m from shares issued in the half, and convertible Loan notes now sit as a non-current Liability of £11.4m rather than a current one. (LSE:IQE) Net Assets rose to £148.3m from £89.7m at the end of 2025. On our reading, the combination of fresh equity and a longer-dated convertible has removed near-term refinancing pressure that weighed on the group a year ago.

Trading that the balance sheet now supports

Revenue rose 43% to £64.6m in the half, with photonics up 45% to £38.5m and wireless up 40% to £26.0m. Adjusted EBITDA swung to a £6.0m profit from a small loss, helped by higher factory utilisation and a richer product mix. The group still reported a loss before tax of £12.6m, and finance costs rose to £4.6m.

Cash generation remains thin. Reported Operating Cash Flow was £1.2m after a £4.0m Working Capital outflow and £2.4m of restructuring and strategic review costs, while property, plant and equipment spending was £1.1m. Management plans to convert existing tools to add indium phosphide capacity in the second half rather than build new plant.

Guidance and the share count

IQE said it remains confident of full-year 2026 Revenue growth above 30% and adjusted EBITDA in the low-teens of millions of pounds. That is company guidance, not a reported result. The fundraising has enlarged the share base: following admission of shares from a warrant exercise by chair Mark Cubitt at 13.5p, notified on 22 October, IQE said it would have 1,332,837,130 shares in issue. At the 33.05p closing price for the 3 November session, on LSE delayed data, our arithmetic implies a Market Value of roughly £440m.

Risks to keep in view

Remaining lease liabilities of about £42.5m and the convertible notes still need servicing. Losses continue at the pre-tax level, and photonics growth was partly helped by the release of US defence programme funding, which may not recur at the same pace. Demand linked to AI data centres can shift quickly, and customer concentration in that market is a known feature of the sector. Any capacity conversion also carries execution risk. The Main Market move itself will involve costs and a new regulatory regime, and its timetable is a target rather than a commitment.

What comes next

IQE intends to move its shares from AIM to the London Stock Exchange's Main Market, targeting admission in the first half of 2027, and has said further details will follow. The board has said it expects the move to broaden institutional access and support index inclusion. Full-year results for 2026 would be the next test of whether the stronger balance sheet is matched by sustained cash generation.