IQE Share Price is Recoiling: Is it Safe to Buy the Dip?

IQE share price has pulled back in the past few days. It has dropped to a low of 49.10p, which was much lower than this month’s high of 54.80p. The stock remains about 77.40% above the lowest level in 2022. It has outperformed other chip stocks like Intel, Nvidia, AMD, and Taiwan Semiconductor among others. So, is IQE a good buy?

What is IQE?

IQE is a mid-cap British company that manufactures products that are used in the manufacture of computer chips. The firm manufactures RF epitaxial wafers, photonics epitaxial wafers, and substrates, which are used by all chip manufacturing companies, 

The epiwafer market is a gigantic one. According to Yale Intelligence, the industry was valued at over $1.7 billion in 2022 and it is expected to have a compounded annual growth rate (CAGR) of 22% to $4.6 billion in 2027. 

The semiconductor industry is expected to have robust growth in the coming years as key megatrends like the metaverse, 5G, and connected cars continue. 

However, the industry is also going through a transition as countries seek to refine their semiconductor supply chain. The US passed the CHIPs Act in a bid to boost domestic manufacturing while the European Union is investing to boost its chip manufacturing. 

The most recent result showed that the company’s business did well in the first half of the year. Revenue rose from £79.5 million in 2021 to over £86.2 million. Its adjusted EBITDA grew slightly to £12.3 million while its adjusted loss after tax widened to more than £8.3 million. 

Most of the revenue growth came from its wireless business, whose revenue rose by 4%. Its other segments, including photonics and CMOs decline by 1% and 33%, respectively. 

IQE expects that its revenue will grow by low single digit with strong photonics sales offsetting softness in the wireless business. 

IQE share price forecast

The daily chart shows that the IQE stock price has pulled back in the past few days. In this period, it has managed to move below the important support level at 51.50p, which was the highest point on November 23rd. The shares remains above the 50-day and 100-day moving averages while the Relative Strength Index (RSI) moved below the neutral point.

The stock will likely continue falling as sellers target the key support level at 45.30p. A move above the resistance at 51.50p will invalidate the bearish view. 

IQE share price