UPDATE 1-IQE posts first-half pretax loss, cites weak smartphone market

(Adds revenue, guidance, background on Huawei)

Sept 3 (Reuters) – IQE Plc reported a first-half loss on Tuesday, months after it flagged order delays at its wireless unit as U.S. restrictions on China’s Huawei hit the chip industry’s supply chain.

The Cardiff-based supplier of wafer products and services to the semiconductor industry – part of which supplies Huawei, reported a pretax loss of 3.7 million pounds ($4.54 million) for the six months ended June 30 after a pretax profit of 6.6 million pounds a year earlier.

IQE, which makes semiconductor wafers for chips used in Apple products among others, said revenue fell 9% to 66.7 million pounds, hurt by a weak smartphone handset market, lower demand, international trade tensions and fall in demand from a major laser customer.

The chip industry is already grappling with oversupply and curbs of Huawei have delivered an additional blow, with Huawei supplier Broadcom Inc estimating $2 billion could be knocked off the company’s sales this year. However, other companies, such as Intel Corp and Micron Technology have raised hopes of a recovery.

The United States restricted Huawei Technologies from buying U.S. goods in May, saying Beijing could use the firm’s equipment for spying. The move ratcheted up trade tensions between the world’s two largest economies and has raised the spectre of billions of dollars of lost sales for chipmakers, software companies and others in Huawei’s U.S. supply chain.

Revenue from IQE’s wireless unit fell to 30.15 million pounds in the first half from 42.5 million pounds a year earlier. The business accounted for more than 60% of total revenue in 2018, with the U.S. market bringing in more than 60% of total sales.

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IQE also reiterated its annual revenue guidance of between 140 million pounds and 160 million pounds, anticipating higher second-half sales, but said core earnings margins will remain low as the utilisation of facilities remains low versus capacity.

In June, the company warned it would miss its annual revenue forecast saying several of its chip customers had cut their forecasts after the Huawei ban.

$1 = 0.8145 pounds
Reporting by Noor Zainab Hussain in Bengaluru



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