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IQE falls on worries about competion from US giant Qualcomm
(Guardian Web Via Acquire Media NewsEdge) IQE, the maker of semiconductor materials, has dropped more than 14% on competition fears.
US giant Qualcomm, the world's leading supplier of chips for mobile phones, said it would enter IQE's radio frequency market.
Qualcomm introduced a new silicon-based radio frequency chip which could threaten IQE's product base, sending shares in the UK company down 4.75p to 28.75p in heavy trading volumes. Analyst Eoin Lambe at Liberum Capital said:
Importantly for IQE Qualcomm's solution is based on silicon (CMOS) while to date most of the radio frequency chips in mobile phones have relieved on IQE's epi wafers. This is obviously negative for IQE. Qualcomm has not released any detailed specifications at this point. Speaking to IQE, they believe that Qualcomm will initially target the low end of the Chinese smartphone market while most of the value is at the high end. No change to numbers but may dampen sentiment towards IQE.
He kept his buy recommendation on IQE, however, as did Vijay Anand at Espirito Santo:
We believe [Qualcomm's] silicon-based product primarily targets the low-end handset market which we estimate accounts for only 5%-6% of IQE's revenues. To the extent that silicon has inherent physical limitations versus compound semiconductors, we believe that Qualcomm's move is unlikely to have a material impact on IQE.
(c) 2013 Guardian Newspapers Limited.
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