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One of Wales' leading technology firms, IQE, has been tipped to be at the heart of the next iPhone from Apple.

IQE, which is listed on the London Stock Exchange, makes the special materials that are found in laser ­diodes, which are expected to feature in the next Apple iPhone - to power ground breaking 3D tracking technology.

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The iPhone 8, due for release in September with three models, will have facial recognition software to unlock handsets.

A supply contract with Apple for IQE could be worth tens of millions of pounds.

It comes as IQE, which has its headquarters in St Mellons, Cardiff, and has operations across the world, has seen its share price triple this year.

It now has a market capitalisation of $1bn.

And IQE recently struck a deal to create the world's first compound semiconducter cluster in south east Wales.

In a deal with the 10 local authorities that make up the Cardiff Capital Region, it has agreed a long-term lease at the former LG Semicon plant in Newport for the commercialisation of the cluster.

The project is being backed under the region's £1.2bn City Deal.

For the first half of this year it delivered impressive sales of £70m, in interim results in which its board said it now expects to exceed market expectations for the full year.

Its chief executive Drew Nelson declined to comment on speculation on any tie up with Apple.

However, in releasing its latest results, IQE confirmed there has been a "significant ramp" in so called vertical cavity surface emitting laser wafers, marking an "inflection point in the commercialisation of this technology."

And production of the wafer technology for Apple is expected to be based in Wales.

On the financial results Mr Nelson said: "The first half of 2017 has been a very exciting time for the IQE Group. Overall, all business units have progressed in line with expectations, although the photonics unit has been the stand out with continued strong double digit growth, accelerating towards the end of the first half.

"The group has multiple high growth opportunities ahead, and in order to ensure future capacity is in place in a timely fashion to address H2 2018 and subsequent demand, we have announced an MOU with Cardiff Capital Region to secure operational facilities in a highly cost effective arrangement.

"In light of recent progress and its increasingly confident outlook, the board expects the group will now exceed market expectations for the full year and whilst it remains early into the start of the mass-market adoption of our technology, it is possible that with the current contract momentum, a more significant upgrade to current market expectations could be delivered for 2018. "