IQE’s CEO warns on indium phosphide supply. China has 70% of it, Bloomberg reports

A Welsh chipmaker has just posted a 40% jump in revenue. Its shares are up 849% this year. And its chief executive has told an interviewer that one of the industry’s key materials is becoming a supply risk.

Sofia Gerace reported the interview for Bloomberg. Jutta Meier runs IQE, based in Cardiff. She said access to indium phosphide substrates is becoming a key risk for the whole semiconductor industry. She linked that to uncertainty created by Chinese export controls.

Indium phosphide is the material behind photonics. Those are the chips that generate and amplify the light signals moving data around an AI data centre. Demand is rising faster than supply.

China holds 70% of it

That figure comes from the US Geological Survey, and it is the whole problem in one number.

Meier put the challenge for the wider sector as “geopolitical constraints” around access to the material. On IQE itself she said this. “We are mitigating the risk by a broad engagement with different suppliers,” she said. “But ultimately, export control licenses will also impact us if the policies around those are revoked.”

IQE told TNW that it is mitigating potential supply risk through broad engagement with different suppliers, and that its chief executive was highlighting geopolitical constraints and export controls as a wider consideration for the industry.

Both halves of that are worth taking seriously. Diversifying suppliers is the correct response. It is also a response to a market where one country holds 70% of the material. An executive saying so on the record, with her share price up 849%, is being more candid than the situation requires.

We reported the choke point in June

This is the same material TNW covered when Beijing began slow-walking export licences. At that point wafer prices had risen around 250%. The constraint showed up in pricing months before it showed up in anyone’s commentary.

Three months on, the chief executive of a company that buys those substrates has put her name to it. That is the sequence worth noticing. The market moved first and the disclosure followed, which is the usual order and the reason prices are worth watching more closely than statements.

The company sits on both sides of the same trend

IQE’s numbers are the strange part.

In July the company forecast 20% sales growth for 2026. That followed a 2025 in which revenue fell 18%, to £97.3m. It has now reported a 40% jump and reaffirmed guidance of more than 30% growth for the full year.

So the July forecast has been beaten and then raised, inside two months. Nothing in the interview suggests the company saw that coming when it set the original number.

AI data centres are driving it, along with sensors in smartphones, wireless and defence work. The wireless side recovered in the first half after a weak 2025, when photonics overtook it as the largest part of the business for the first time. Shares rose as much as 6% in London on the day.

Which produces an odd position. The tightness in the market for IQE’s inputs is the same phenomenon inflating its order book. For any supplier, scarcity helps only while its own inputs keep arriving.

Meier said the export licence risk is already built into the outlook for the second half of the year. That is a company telling investors it has priced in a geopolitical variable it does not control.

Her hedge against that is breadth. IQE’s exposure to AI runs beyond data centres, into robotics and sensing, which she said limits 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. That is a reasonable hedge, and it is about end markets rather than inputs.

What this says about European industrial policy

Europe has very few compound semiconductor firms of any scale. IQE is one of them, it is in Cardiff, and it sits in a supply chain where China holds most of the world’s material.

That is dependency in miniature, and it is more specific than the sovereignty debate usually gets. The argument is normally about fabs and chip design. This is about a raw material, upstream of both, where one country holds most of the world’s supply. It has already shown it will use licensing as leverage.

The continent’s vulnerability in this sector is not only commercial. A Belgian researcher has been held since May over gallium nitride secrets allegedly passed to China, in another corner of the same compound semiconductor industry.

Export controls keep producing the opposite of what they promise

There is a symmetry here that neither side seems to enjoy.

US controls on chip exports pushed Chinese firms towards custom silicon rather than stopping them. Chinese controls on indium phosphide are now pushing Western buyers to hunt for alternative suppliers. Eventually that means alternative sources being developed outside China.

Both moves are rational on their own terms. Both accelerate the thing they were meant to prevent, which is a second supply chain owned by the other side. The difference is timing. Substrates take years to bring online, and the AI build-out is not waiting for anyone.

The listing detail nobody has picked up

IQE also intends to move from AIM to the Main Market of the London Stock Exchange, to reach institutional capital and improve liquidity in its shares.

That is a small line in a story about supply chains, and it points somewhere else. A company on an 849% run deciding it wants institutional money is a company that thinks the run has further to go.

It is also a European technology firm choosing to move up within a European exchange rather than out of one, at a moment when the traffic runs the other way. France’s Pasqal listed on Nasdaq in August rather than at home.

What to watch

Whether the indium phosphide licensing tightens further, which would show up in wafer prices before it shows up in any announcement, exactly as it did in June.

Whether IQE’s second-half results hold the guidance, given that the company has already told the market the licence risk is inside the forecast.

And whether anyone outside China moves to build substrate capacity. That is the only structural answer, it takes years, and nobody has announced it.

Correction, 8 September 2026:
An earlier version of this article said that IQE “cannot source its own substrate”, and described the supply position in more definitive terms than IQE’s chief executive used in her interview with Bloomberg. Jutta Meier said access to indium phosphide substrates is becoming a key risk for the semiconductor industry, and that IQE is managing that risk through broad engagement with different suppliers. She did not say the company is unable to obtain the material.

Correction, 16 September 2026:
Following further contact from IQE, we have amended several passages that described the supply position more definitively than Jutta Meier’s comments to Bloomberg supported. The article previously said that Chinese export controls “have made the supply uncertain” and that the substrate IQE depends on “comes overwhelmingly from China”. The 70% figure describes China’s share of world supply, reported by the US Geological Survey, and not IQE’s own sourcing, and the previous headline attributed it to Meier. We have replaced our paraphrase of her remarks with her words as Bloomberg reported them, and added IQE’s response.