IQE maintaining full-year revenue guidance despite US adding Huawei to Entity List

IQE plc of Cardiff, Wales, UK says that - in response to the US Department of Commerce’s Bureau of Industry and Security (BIS) adding Huawei Technologies Co Ltd and 68 of its affiliates to its ‘Entity List’ prohibiting the sale to Huawei of products covered by the Export Administration Regulations (EAR) without obtaining an appropriate export license - it is clarifying its potential exposure to the situation, as it supplies epitaxial wafers to multiple chip companies in global supply chains, some of whom supply Huawei.

“The situation involving the ban is dynamic and it is not clear at this time how long it will remain in force or what the full implications will be,” says IQE. However, the firm believes it is in a strong position to adjust to the possible consequences and scenarios resulting from this in a positive manner. “Across all product lines, IQE has supply relationships with multiple non-US customers, so is well placed to adapt to mid to long-term share shifts at both the component (chip) and the OEM level,” the firm reckons. Most of IQE’s technologies and supply chains are not affected by the ban and IQE complies fully with the EAR, it adds.

In the short term, IQE believes it may experience some delay to orders and the potential for adjustment of supplier-managed inventory levels, predominantly in its Wireless business unit. The Photonics and Infrared business units are essentially unaffected.

IQE says that it has been engaging across its customer base in recent days specifically on this subject, and estimates that its current maximum risk exposure is less than 5% of total full-year 2019 revenue guidance. “Although there remains uncertainty and unpredictability related to this specific matter, given the market opportunity IQE faces in second-quarter 2019, the company leaves full-year guidance unchanged,” the firm states.

“The recent ban on sales of products from US companies to Huawei and its affiliates is a factor completely outside of IQE’s control,” notes CEO Dr Drew Nelson. “However, our long-term strategy of supplying as many of the supply chains into all major OEMs as possible protects IQEs overall supply to a very significant degree. As a result, we believe the ban will have a limited impact on our mid- to long-term revenue trajectory. Indeed, the breadth of IQE’s current product range, the new materials technologies being introduced to market over the coming months and years, and IQE’s global manufacturing footprint are powerful mitigating factors in dealing effectively with the ongoing changing geopolitical landscape in our industry,” he believes.

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