IQE.L

Key Metrics

Supply Chain Position

World's largest independent III-V epiwafer foundry. Citrini Layer 3 — feeds LITE and COHR directly. Multi-year Lumentum strategic supply agreement.

Why Included

Cheapest leveraged play on the LITE/COHR production ramp. £211M market cap vs LITE's $100B+. Lumentum agreement extended Dec 2025. Quintessent quantum dot laser partnership. Active takeover process with Lazard advising — non-binding offers in negotiation. Binary: acquisition at 40-60p or reversion to 10-15p on standalone fundamentals.

Customers: Lumentum is the largest named customer (VCSEL epiwafers). Revenue declining from peak.

Red Flags

• •Loss-making — revenue halved from £178M (2020) to £97M (2025). EBITDA barely positive at £2M
• •Needed £18M emergency convertible financing at 15% discount. HSBC waived bank covenants
• •979M shares outstanding — significant dilution if CLN converts (adds 154M shares)
• •Strategic review active 6+ months with no firm offer — deal may collapse
• •Micro-cap (£211M) with AIM liquidity — high volatility, information asymmetry
• •Photonics revenue actually declining (£59M → £50M → flat) — AI/InP narrative is forward-looking, not current