IQE raises sales forecast on surging AI and data center demand

Cardiff-based IQE plc lifted its FY 2026 revenue growth guidance to exceed 20% year on year as orders tied to artificial intelligence and data centres strengthened, extending a recovery that had been building since its May results. The AIM-listed semiconductor supplier sits far downstream from the best-known chip designers, but its materials are part of the optical and sensing layers that AI infrastructure depends on.

IQE’s key exposure is indium phosphide, a material the company says underpins global fibre-optic communication networks and serves as a platform for next-generation AI and terahertz communications. IQE has said it has been producing InP epiwafers since its inception, helping enable fibre networks that power AI infrastructure and cloud services up to 800G. That places the company in a narrow but important part of the semiconductor stack, where demand rises when operators build out high-speed links between servers, switches and data-centre hardware.

The latest order flow gives the upgraded outlook more substance. On 14 July, IQE announced a $14 million production order from a strategic global technology customer for AI and datacentre markets. The company said the deal strengthens its position in growing AI and datacentre ecosystems and supports next-generation data communications technologies. A month earlier, on 15 June, IQE and Tower Semiconductor disclosed a multi-year agreement for InP epiwafer supply and settled an intellectual property dispute, a sign that IQE is pushing to secure a firmer role in the optical side of the AI buildout.

IQE had already pointed to improving trading conditions. In its 28 May full-year 2025 results, the company said improved second-half trading momentum was carrying into 2026 and that a successful strategic review and fundraise had transformed its capital structure. By late May, the company was already being described as a beneficiary of AI data centres after a difficult year, alongside stronger defence-chip demand and higher annual profit.

The question now is whether that demand proves durable. Semiconductor suppliers can benefit quickly when hyperscalers and infrastructure vendors step up spending, but they remain exposed to sharp swings in customer capex and inventory cycles. For the UK semiconductor sector, a stronger forecast from a Cardiff-based manufacturer on the London market is a useful sign that AI spending is reaching beyond the largest chipmakers and cloud groups. The test is whether the current wave of data-centre investment keeps flowing long enough to support sustained orders, not just a brief burst of optimism.