Trading Update & Strategic Review Update

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE AND ACCORDINGLY THERE CAN BE NO CERTAINTY THAT ANY FIRM OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER WILL BE MADE

Cardiff, UK

Trading Update and Strategic Review Update

IQE plc (AIM: IQE, "IQE" or the "Group"), the leading global supplier of compound semiconductor wafer products and advanced material solutions, provides a trading update for the full year ending 31 December 2025.

As previously noted, trading in H1 2025 was impacted by macroeconomic uncertainty and as a result, some end customer demand was fulfilled with existing inventory. The Group has continued to experience weakness in wireless markets, largely as a result of softness in mobile handset sales, and this is expected to persist through 2025. In addition, delays to federal funding cycles in US military and defence sectors are resulting in the deferral of orders into 2026.

Accordingly, revenue for FY 2025 is expected to be between £90.0m to £100.0m, resulting in an adjusted EBITDA position of between £(5.0)m to £2.0m. H1 2025 revenue is expected to be at least £44.0m with an £(0.4)m adjusted LBITDA.

The Group will report its interim results on 23 September 2025.

Strategic Review

The Board continues to believe there is a significant market opportunity for IQE because of the Group's leading position in providing advanced compound semiconductors across several market verticals and to a base of global marque customers. The Board is now expanding the scope of the previously announced Strategic Review to also incorporate the potential sale of the Company and is seeking buyers.

While the Strategic Review process remains ongoing, IQE is progressing negotiations with multiple parties for the sale of the Group's Taiwan operations. Should the sale of Taiwan be concluded, it is expected that the proceeds from such sale will be used to fully repay the Group's Revolving Credit Facility with HSBC Bank and Convertible Loan Notes issued in March 2025, as well as providing IQE with cash to invest in its core operations. The Board continues to be advised by Lazard on the full scope of the Strategic Review.

The Takeover Panel (the "Panel") Executive has granted a dispensation from the requirement of Rules 2.4(a) and 2.4(b) of the Code such that IQE is not required to identify in this announcement any potential offeror with which IQE is in talks, or from which an approach has been received, unless that potential offeror has been specifically identified in any rumour or speculation.

Following this announcement, IQE is now considered to be in an "offer period" as defined by the Code, and the disclosure requirements as set out below will apply.

IQE is in receipt of an approach from a potential offeror at the time of this announcement. There can be no certainty either that an offer will be made nor as to the terms of any offer, if made.

Jutta Meier, Chief Executive Officer of IQE, commented:

"We have updated our expectations for the full year to adjust for the deferral of certain contracts in our Wireless and Photonics segments. This is a result of continued global and macro uncertainty which has impacted the unwinding of customer inventory levels pre-built in 2023 and 2024, the sale of new mobile handsets and the release of budgetary spending across the US military and defence sector.

Looking ahead, while the Strategic Review remains ongoing I am encouraged by the progress we are making and remain confident in our ability to unlock value for all of our stakeholders."

White & Case LLP is acting as legal adviser to IQE.

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