By DhanushVignesh Babu

(Reuters) -British semiconductor wafer maker IQE said on Tuesday it expects annual profit to be at the lower end of analysts' estimates as some of its markets were slower to recover from a supply glut, sending its shares 13% lower.

IQE, whose 'epi-wafers' are used in the iPhone's facial recognition sensors, expects full-year adjusted core profit to be at the lower end of analysts' estimates of 11.1 million pounds to 16.6 million pounds ($14.5 million to $21.7 million).

"We expect to continue to see a recovery in the wireless market, helped by new product launch; and our photonic business to remain slightly flat as we walk out of the second half," CEO Americo Lemos said in a call with Reuters.

IQE's shares dropped 13% by 0827 GMT.

The Cardiff-headquartered company logged a core profit of 6.6 million pounds for the six months ended June 30, versus a core loss of 5.7 million pounds in the previous year.

Photonics, IQE's unit that makes the epi-wafers and contributed more than half of total sales last year, reported a 4% drop in revenue in the first half.

To capitalize on the artificial intelligence (AI) frenzy, IQE has been investing in systems to enable more efficient data transfer in data centres, which are vital to generative AI applications.

In July, IQE said it plans to file for an IPO for its Taiwanese business on the local stock exchange, although it would retain control of the unit.

IQE said it received positive feedback from its initial round of investor engagement in the region. ($1 = 0.7645 pounds)

(Reporting by DhanushVignesh Babu in Bengaluru; Editing by Sherry Jacob-Phillips and Savio D'Souza)