IQE CEO Warns of Emerging China Supply Risk for Chip Industry

IQE Plc Chief Executive Officer Jutta Meier said access to indium phosphide substrates is emerging as a key risk for the semiconductor industry as Chinese export controls create uncertainty over supplies.

The main challenge for the wider sector is “geopolitical constraints” around the access to the material used to make chips for high-speed data transmission, as supply struggles to keep pace with demand, Meier said in an interview.

“We are mitigating the risk by a broad engagement with different suppliers,” Meier said. “But ultimately, export control licenses will also impact us if the policies around those are revoked.”

China dominates the indium phosphide supply chain, accounting for 70% of the total world’s supply, according to data from the US Geological Survey.

The Cardiff-based company reported a 40% jump in revenue, driven by demand from AI data centers, sensors used in smartphones, wireless and defense applications. IQE reaffirmed its guidance for revenue growth of more than 30% in fiscal 2026, according to a statement on Monday.

Meier said that risks around export licenses have already been factored into IQE’s outlook for the second half of 2026.

Shares of IQE rose as much as 6% in London. Before today, they had surged 849% this year.

The compound semiconductor sector has benefited from a surge in demand for indium phosphide photonic, a chip technology used to generate and amplify high-speed light signals inside AI data centers. Still, concern about the sustainability of the AI spending boom and China’s advances in chipmaking capabilities sparked a selloff in stocks in July.

Meier said IQE’s exposure to AI extends beyond data centers to areas including robotics and sensing, helping limit its reliance on the current infrastructure boom. “As AI and technology will evolve, IQE is ready to supply solutions into that space in every single application,” she said.

The company’s wireless business picked up in the first half of the year, driven by demand for specialized semiconductor wafers used to make radio-frequency chips. The recovery follows a weak 2025, when photonics overtook wireless as the company’s largest segment for the first time.

IQE also said it intends to move its listing from AIM to the Main Market of the London Stock Exchange to access institutional capital and increase liquidity in its shares.