IQE (IQE): At the heart of 5G transformation

Edison Investment Research Limited Edison Investment Research Limited: IQE (IQE): At the heart of 5G transformation 11-Dec-2020 / 08:44 GMT/BST London, UK, 11 December 2020 IQE (IQE): At the heart of 5G transformation The breadth of IQE's technology portfolio and ability to serve compound semiconductor chip customers in the US and Asia puts it in a good position to benefit from rising demand for compound semiconductor applications for 5G and connected devices. Infrastructure roll-out appears relatively unaffected so far by the coronavirus pandemic. Global handset shipments are expected to pick up in 2021, potentially stimulated by new 'must-have' AR apps enabled by 5G connectivity and world-facing time-of-flight (ToF) devices, supporting a trebling of PBT in FY21. IQE's share price has more than recovered the ground lost during the panic selling in March. At current levels, IQE is trading in line with the mean EV/EBITDA multiples of the sample of companies engaged in manufacturing VCSEL epitaxy. Given IQE's broader product portfolio, we believe it is reasonable for IQE to trade on multiples that are at the upper bound of this sample. However, we believe share price improvement will require greater visibility of how handset demand will be affected by any pandemic related recession in 2021 and whether the switch to 5G and the availability of as yet unknown 'must-have' AR apps will be sufficient motivation for cash-strapped consumers to justify upgrading their handsets. Click here to view the full report. Subscribe to Edison's content to receive reports by email. All reports published by Edison are free-to-access and available on the website. About Edison: Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information please contact Edison: Anne Margaret Crow, [phone] Dan Ridsdale, [phone] [e-mail] Learn more at www.edisongroup.com and connect with Edison on:  LinkedIn  https://www.linkedin.com/company/edison-group- Twitter   www.twitter.com/Edison_Inv_Res YouTube   https://www.youtube.com/user/EdisonITV/videos Dissemination of a CORPORATE NEWS, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

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