IQE upbeat on prospects as losses narrow to £3m

IQE, the UK semiconductor supplier, yesterday became the latest player in the industry to paint an upbeat picture about the health of the market, saying its second-quarter losses had shrunk to £3m, down from £18m a year ago.

IQE, the UK semiconductor supplier, yesterday became the latest player in the industry to paint an upbeat picture about the health of the market, saying its second-quarter losses had shrunk to £3m, down from £18m a year ago.

The company's shares rose 1.62p to 12.62p as the company also issued an upbeat statement about prospects for the rest of the year.

"The depressed state of the industry following the boom of the late 1990s has been well documented and IQE's business has suffered along with the rest of the sector. However, during the first half there have been signs of a cautious but steady return to growth," the company said. IQE, whose products include materials for infrared lasers, has for the past two years suffered from a downturn in the semiconductor business, during which demand for telecoms chips collapsed as heavily indebted telecoms operators cut back on spending in the face of an industry-wide cash crunch.

Drew Nelson, IQE's president and chief executive, said things were now changing. "There remains a lack of visibility in the sector as a whole, but the last few months have seen an increase in interest in a number of key technologies. We expect tangible signs of trading improvement to become visible from the fourth quarter of this year onward," he said.

IQE reported operating loss before goodwill amortisation and operating exceptional items of £2.87m for the second quarter to 30 June, compared with a loss of £17.91m last year.

The company, which has shed jobs to cut losses, said cash outflows from the business would continue through 2003 and early next year but added it was poised to return to profitability.

IQE had net cash of £10.7m at the end of June, down from £13.5m at the end of the first quarter.