IQE (GB:IQE), a semiconductor materials supplier providing wafers for Apple's iPhone facial recognition sensors, is reportedly exploring the potential sale of the company following a downward revision of its annual earnings forecast.

The British firm saw its shares fall 9.1% to 7.82 pence in London trading, marking one of its lowest levels in years. IQE, which also operates manufacturing facilities in the U.S. and Taiwan, attributed the revision to continued weakness in mobile phone demand, which has dampened its wireless component business.

According to the company, shrinking smartphone sales, coupled with U.S. tariffs on semiconductor imports, have increased operational pressure. To mitigate tariff impacts and reduce debt, IQE is considering moving parts of its production to the U.S.

The company is already engaging in preliminary discussions with potential buyers and confirmed that plans to divest its Taiwan operations remain active. While one unnamed firm is reportedly in talks, further details were not disclosed.

IQE now expects core profits between a loss of £5 million ($6.8 million) and a gain of £2 million ($2.7 million), down from prior guidance of £7.4 million to £10 million ($10 million–$13.5 million). Annual revenue is projected at £90 million–£100 million ($121 million–$135 million), reduced from previous expectations of £115.1 million–£123 million ($155 million–$166 million), due in part to delayed contracts in its wireless and photonics businesses.

In 2024, IQE reported core profits of £8.1 million ($10.9 million) on revenue of £118 million ($158 million).

Industry data from IDC indicates that global smartphone shipments slowed to a 1% year-on-year increase in Q2, underscoring the challenges facing component suppliers like IQE. The company stated that soft demand in the wireless market is expected to persist throughout 2025.