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IQE uses a crystal-growing process called 'epitaxy' to create bespoke semiconductors that are used in virtually all high-tech systems. It's profiting from chip manufacturers' increased outsourcing of wafer production, which reduces costs and accelerates time to market. IQE is also a major beneficiary of soaring demand for internet-connected devices and high-speed wireless connectivity. Faster, feature-rich smartphones and tablets require more and better microchips; the amount of switches and power amplifiers in smartphones that can use IQE's components has risen from a few cents' worth in a 2G device to between $4 and $5 in a 4G device.

The group has diversified into making photonic components, which are used in higher-margin applications such as lasers and sensors, thermal imaging, solar cells, missile guidance and aircraft navigation. Global customers are increasingly adopting its microchip laser technology, VCSEL, in industries such as cosmetics, lighting and data communications. That drove photonics revenue - excluding currency movements - up 23 per cent in 2014, or from 15 per cent to 19 per cent of group turnover.

IQE is gathering momentum across its business. It received $3m of orders for antimonides, used in infrared technology, in the first quarter of 2015. It is now ramping up production of solar energy materials. And its expertise in nitrides is helping it gain traction in the power electronics switching and LED markets - it inked a supply deal with US semiconductor giant M/A-COM in 2014.

The group has also slashed costs and improved efficiency, partly by transferring production between sites and establishing six business units targeting specific markets. The reorganisation helped it to widen its adjusted operating margin by 4.2 percentage points to 15.7 per cent. Improving cash generation and a lack of substantial capital spending plans leads broker N+1 Singer to expect a swing to £5.2m in net cash in 2017.

Sentiment towards IQE's shares is not what it could be, though. The wireless market was slow in 2014 as microchip makers reduced inventories and invested less in the months prior to a new wave of hardware launches. Investors were also disappointed at the unexpected news of the £18m one-off hit (including a £5m cash cost), which reflected a joint venture with WIN Semiconductors and a Singaporean university to establish a development centre.