A small Welsh tech company reportedly making parts for Apple's upcoming iPhone 8 has seen its revenue grow in the first half of the year on the back of rising chip sales.
Revenue at IQE, which makes semiconducter wafers for 3D imaging, grew by 12 per cent to £70.4m in the six months to June.
Industry insiders have suggested that the firm is supplying Apple with technology for the iPhone 8, which is expected to be unveiled in a week's time and is rumoured to feature facial recognition and a greater focus on augmented reality.
IQE chief executive alluded to "direct engagement with OEMs [original equipment manufacturers]" and "multiple programmes enabling a number of mass market technologies", noted Canaccord Gebuity analyst Paul Morland.
Pre-tax profit fell two per cent to £10.6m on the back of reduced cash coming from licencing. But analysts remain confident in the long term performance of aim-listed IQE, which has seen its share price rocket more than 400 per cent over the past year.
"Photonics delivered strong growth (up 48 per cent), helped by the early phase of a significant ramp in VCSEL wafers, which we believe is related to the iPhone 8," said Oliver Knott at N+1 Singer.
"Investor focus is on the large 3D Sensing opportunity, which we expect to drive significant near term upgrades, but we continue to believe that IQE’s technology will be adopted in a wide range of high volume use cases, providing continued strong newsflow throughout our forecast period."
Shares opened as much as five per cent lower, but quickly pared losses and was down just over 3.5 per cent at pixel time.
"Capex spending has doubled year-on-year and a further capacity expansion plan has been initiated to meet higher levels of demand that is expected in the second half of 2018," said Liberum analyst Janardan Menon.
"The breadth and depth of customer engagements sets the scene for increasing revenue growth through 2018 and beyond. IQE is representative of trends in compound semiconductor demand driven by VCSELs for 3D sensing, and other products."
At the wafer part of the business, revenues grew by 17 per cent and operating profit increased by a third.
"The compound semiconductor industry is moving through an inflection point. Many of the key innovations that are taking place in the technology world would not be possible without the advanced properties of compound semiconductor materials," said chief executive Dr Drew Nelson, adding that its oulook "has never looked better".
"Indeed, compound semiconductors are the fundamental enabler of innovations such as 3D sensing, biometric sensors, electric and autonomous vehicles, high speed wireless and optical communications, and advanced manufacturing."