Deutsche Bank has reiterated its Buy rating and 60p price target on IQE (AIM:IQE), with analyst John Karidis describing the compound-semiconductor wafer maker's newly announced multi-year Indium Phosphide epiwafer supply agreement with Tower Semiconductor as a major positive development for the company's net present value.
Karidis argues the deal, in which IQE's InP epiwafers will supply several of Tower's advanced silicon photonics platforms for next-generation optical technologies, gives concrete commercial substance to the strategic footprint IQE has been building in high-growth data-centre and AI-adjacent markets.
The agreement covers technology for 200Gb per lane pluggable transceivers, prototyping of next-generation 400Gb per lane modulators, and optical circuit switches for data-centre deployment, with IQE's last close standing at 56.70p against Deutsche Bank's 60p target, implying modest residual upside from current levels.
The Tower deal arrives as a near-term validation that Karidis had previously flagged as critical following the recently completed MACOM-led financing package, with further long-term commercial agreements and shareholder approval of the financing remaining the outstanding watch points for the investment case.
