Wafer maker IQE warns of 40% profit hit from supply crunch

(Reuters) -Chip components supplier IQE projected on Wednesday a 40% plunge in its annual core profit, as the British firm's smartphone-making clients place fewer orders due to supply chain issues, driving its shares 20% lower.

The warning from IQE, which makes semiconductor wafers for chips used in Apple products, comes as smartphone makers and other companies globally grapple with supply chain issues, including a shortage of semiconductor chips.

"In the immediate term, broader semiconductor market shortages have softened demand in some supply chains but we believe these effects to be temporary," said interim Executive Chairman Phil Smith in a statement.

IQE expects 2021 adjusted core profit of about 18 million pounds ($24.1 million) and revenue of 152 million pounds, compared with 30.1 million pounds and 178 million pounds, respectively, a year earlier.

IQE had said in September its adjusted core profit would be similar to prior-year levels on a constant currency basis.

The company, which also sells photonics products, said sales in that division too were below expectations, likely adding further pressure on newly appointed Chief Executive Americo Lemos.

Shares of the technology firm fell as much as 21.4% to a more than 17-month low of 39.60 pence in morning trade.

($1 = 0.7477 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Sherry Jacob-Phillips and Uttaresh.V)