IQE share price drops 26% after noting Huawei ban will hurt profits

The semiconductor company's stock tumbles after offering a weak forecast for its 2019 revenue.

IQE share price has plummeted after worse-than-expected 2019 revenue guidance. The semiconductor wafer maker warned that the US ban on conducting business with Chinese electronics company Huawei will have a distressing impact on the global semiconductor industry.

Huawei ban has global effect on semiconductor industry

Huawei has been placed on a US trade blacklist for allegedly posing a security risk to the US government. As a result, many chipmakers that conduct business with the electronics giant like Broadcom say that the ban will negatively impact their revenue.

IQE is also feeling the effects of the prohibition on conducting business with Huawei. IQE supplies wafers to chip companies, including some that also supply chips to Huawei.

Dr. Drew Nelson, chief executive officer (CEO) of IQE, noted that because of ‘unprecedented times for the global semiconductor industry,’ the corporation expects full-year 2019 revenue to be between £140 million-£160 million. That falls below analysts’ expectations of £175 million.

Nelson spoke about how the Huawei ban will have a wide-ranging effect on semiconductor supply chains.

‘It is now clear that the impact of Huawei’s addition to the US Bureau of Industry and Security’s Entity List is having far-reaching and long-lasting impacts on global supply chains,’ said Nelson.

Can IQE share price survive the Huawei ban?

IG analyst, Jeremy Naylor, noted that IQE has diverse business interests besides semiconductor wafers like lasers and infrared technology. Despite the reduced 2019 forecast, Nelson said that IQE will make adjustments to increase its profits after the Huawei ban.

‘This is a matter outside of IQE’s control but we have responded swiftly to leverage our breadth of relationships and to pursue new sales opportunities. We are also taking prudent expenditure actions in order to manage through this period of uncertainty,’ said Nelson.

‘We anticipate significant new customer qualifications during the second half of 2019 as a result. As global markets adjust and recover, we remain extremely well placed for significant future growth,’ added Nelson.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.