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(Reuters) - Cardiff-based IQE Plc said on Thursday it would take complete ownership of its loss-making joint venture in Singapore to capitalize on supply chains in the Asian country and China's 5G market, sending its shares 5% higher.
IQE, which makes semiconductor wafers for chips used in Apple Inc (NASDAQ:AAPL) products, also manufactures for Asian customers in Taiwan and Singapore. It has banked on the region for significant new orders amid the tariff dispute between the United States and China.
The joint venture, CSDC Private Ltd, was formed in 2015 by its Singaporean unit MBE Technology with WIN Semiconductors and Nanyang Technological University to develop and sell compound semiconductor technologies.
Shares of IQE were up 5.5% at 62.85 pence as of 0715 GMT.
U.S. restrictions on China's Huawei had disrupted the semiconductor industry's supply chain and IQE said it would attempt a turnaround for CSDC as it takes full control, with benefits seen from being closer to Asian chip customers and original equipment manufacturers.
"In the current geopolitical context, Singapore represents a strategically significant site for IQE," Chief Executive Officer Drew Nelson said.
The joint venture, which recorded losses of S$8.9 million ($6.46 million) in 2018, will be bought for a nominal fee of $1 from WIN and S$1 from other stakeholders, the company said.
IQE said it expects its 2019 adjusted core profit and operating profit to take a 500,000 pound hit post the acquisition. It reported a pretax loss of 3.7 million pounds for the six months ended June 30.