Cost controls help lift IQE profit A programme of cost controls that included a temporary cut in staff salaries has helped IQE increase full-year pre-tax profit, while strong smartphone sales contributed to a rise in revenues. The Cardiff-based maker of wafers for semiconductors is recovering from inventory reductions at two of its large wireless customers, a move that contributed to a near-halving in its share price over the past year. In response, IQE employees, including management but not shop-floor staff, last year agreed to a three-month 15 per cent salary cut in order to cope with a dip in sales. The move appears to have paid off, as the Aim-quoted company on Wednesday reported pre-tax profit rose 9.5 per cent to £6.9m, with diluted earnings per share edging up to 1.51p from 1.5p. Revenues rose 4 per cent year-on-year to £75.3m on the back of strong consumer demand for smartphones and tablets. Sales from IQE's wireless division, which supplies wafers used in devices including smartphones, wireless infrastructure, WiFi and GPS devices, edged up marginally to £55.1m in the 12 months to December 31. "IQE provided a solid outlook and we do not make substantial changes to our forecasts this early in the year," said Bob Liao, an analyst at Cannaccord Genuity. We believe growth will accelerate sharply starting as early as the second half when inventory issues subside, new capacity is filled and new products begin to contribute. IQE's technology is found in lasers used in the healthcare industry for skin treatments, and the group has obtained a toehold in solar technology with last month's purchase of a 10 per cent stake in Solar Junction of California. "We continue to ride this wireless wave, and our materials are in pretty much all of the major handset platforms, from Apple to Samsung, Research in Motion and Nokia," Drew Nelson, IQE chief executive, told the Financial Times. IQE said that the global wireless chip market grew by 11 per cent during 2011, whilst the proportion of smartphones shipped grew from 22 per cent of total handset shipments in 2010 to 32 per cent in 2011, bringing the total number of smartphone users worldwide to 960m. Like-for-like sales at the group's optoelectronic division, whose technology is found in computer-based devices such as laser printers and BlueRay players, rose by 20 per cent year on year to £18.5m. Mr Nelson said that the group doubled its capital expenditure over the year to £15m in order to buy new manufacturing equipment to boost its capacity. IQE shares fell by 5 per cent, or 1½p, to 27¾p. The company paid no dividend.