Trading Update

• Demand driven by military and defence, AI, data centre and handset markets
• Strong Q1 2026 order book with improved visibility

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

The Group saw strong trading momentum in H2 2025 due to faster than expected funding releases for some US military and defence programmes, previously anticipated for 2026. IQE also experienced higher than forecast photonics demand in the period, reflecting continued growth in AI and data centre markets, and increased sales of wireless products tied to new handset introductions which benefitted the Group's Taiwan operations.

This is expected to result in a performance at the upper end of the previously announced FY 2025 forecast range[1], with revenue of c.£97m resulting in an adjusted EBITDA position of at least £2.0m due to improved operating leverage as capacity utilisation improves.

Additionally, good progress has been made with stakeholders including customers and suppliers to improve near-term liquidity and working capital, resulting in a cash position of £15.6m as at 31 December 2025.

The Group's banking facilities provided by HSBC Bank plc are subject to certain covenant tests. IQE has received a waiver from HSBC in relation to Q4 2025 EBITDA covenant testing, a reflection of the established and supportive relationship with the bank.

Current Trading

IQE enters 2026 with a strong Q1 order book, reflecting improved demand visibility across core segments including consumer mobile, data centre and AI-related photonics markets. The momentum in wireless demand observed in Q4 2025 is expected to continue, supported by existing customers and recent platform wins.

Growth in data centre deployments and AI-enabled compute, alongside ongoing strength in consumer mobile is also supporting increased demand for the Group's photonics products.

Strategic Review

The Board is negotiating non-binding offers for the Group as a whole in addition to separate bids for certain other Group assets with a view to maximising shareholder value. The Board is encouraged by the level of interest received and the recognition of the intrinsic value of the Group and its component parts. Given the nature of such discussions there can be no certainty which, if any, of the these will progress to a completed deal.

Jutta Meier, Chief Executive Officer of IQE, commented:

"I am pleased to report a positive second half of trading for IQE in 2025. Coupled with a strong Q1 order book and sustained demand across key end markets, the Company is well-positioned to enter 2026.

We continue to advance our Strategic Review and I am encouraged by the progress we are making. I remain confident in the opportunity ahead for the Company and look forward to updating the market in due course."

• Smart Connected Devices
• Communications Infrastructure
• Automotive and Industrial
• Aerospace and Security

DISTRIBUTION

PUBLICATION OF THIS ANNOUNCEMENT

APPENDIX

Directors' confirmation

The directors of IQE confirm that, as at the date of this announcement, the profit forecast remains valid and that it has been properly compiled on the basis of the assumptions set out below and that the basis of accounting used is consistent with IQE's existing accounting policies.

Basis of preparation

The profit forecast is based on IQE's current internal unaudited consolidated accounts for the 12-month period ended 31 December 2025. The profit forecast has been compiled on the basis of the assumptions set out below.

The basis of the accounting policies used in the profit forecast is consistent with the existing accounting policies of the IQE group.

Assumptions

The profit forecast has been prepared on the basis referred to above and subject to the principal assumptions set out below. The profit forecast is inherently uncertain and there can be no guarantee that any of the assumptions listed below will occur and/or if they do, their effect on IQE's results of operations, financial condition or financial performance may be material. The profit forecast should be read in this context and construed accordingly.

The directors of IQE have made the following assumptions in respect of the financial year ending 31 December 2025:

Assumptions within IQE's control or influence:

• no material change to the existing strategy or operation of IQE's business, including the business or operating model;
• no material adverse change to IQE's ability to meet customer, supplier and partner needs and expectations based on current practice;
• no material unplanned asset disposals, merger and acquisition or divestment activity conducted by or affecting the IQE group;
• no material change to the present management of the IQE group; and
• no material change in capital allocation policies of the IQE group.

Assumptions outside of IQE's control or influence

• no material effect from changes to existing prevailing macroeconomic, fiscal / inflationary conditions in the markets or regions in which the IQE group operates;
• no material adverse change to IQE's market environment, including in relation to consumer demand or competitive environment;
• no material adverse events that have a significant impact on IQE's major partners or suppliers;
• no material changes of the value of pound sterling above the average foreign exchange rates that have applied during the 12-month period ended 31 December 2025;
• no material adverse events that would have a significant impact on the IQE group, including (but not limited to) information technology/cyber infrastructure;
• no material new litigation or regulatory investigations, and no material unexpected developments in any existing litigation or regulatory investigation, each in relation to any of IQE's operations, products or services; and
• no material change in legislation, taxation or regulatory requirements impacting IQE's operations, expenditure or its accounting policies.

[1] Guidance of revenue of £90m to £100m and adjusted EBITDA of £(5.0m) to £2.0m.