UPDATE 2-IQE swings to profit, sees H2 results ahead of mkt view

* Opto business to grow more strongly in 2014- CFO

* Plans capex of 5-8 mln stg in 2011- CEO

* H1 pretax profit at 2.2 mln stg

* Shares up nearly 7 pct (Recasts; adds CEO, CFO and anlyst comments, updates share movement)

By Juhi Arora

BANGALORE, Sept 1 (Reuters) - British technology firm IQE Plc (IQE.L) swung to a first-half pretax profit as demand for smartphones picked up, and said it expects results for the second half to be ahead of market view, sending its shares up nearly 7 percent.

IQE, whose semiconductor wafer products are used in mobile handsets, Wi-Fi, WiMAX and DVDs, said it sees the smartphone market growing at an annual rate of 30 to 40 percent per annum, with carriers trying to migrate customers to 3G technology.

"We think we will be a little ahead of market estimates in terms of revenue and therefore with highly operationally geared model we should deliver profits ahead as well," Chief Executive Drew Nelson told Reuters.

Shares of IQE were up 6.8 percent at 26.5 pence at 1228 GMT on the London Stock Exchange.

The company, which operates across the wireless, optoelectronics and electronics divisions, said it expects the ratio of growth to be maintained across its businesses in 2011 but forecast the optoelectronics business to grow more strongly in 2014.

The company's optoelectronic products are used in consumer applications like finger navigation and optical heating.

Chief Financial Officer Phil Rasussen said he expects the optoelectronics business to contribute more to the overall revenue as it has potential for strong growth.

Analyst Paul Cornelius of FinnCap, who has a "buy" rating on the stock, said the development of optoelectronic applications have the potential to put compound semiconductor materials in the mainstream of consumer electronics.

Nelson added that he expects strong growth across all markets, which would enable the company to take more market share going forward.

January-June pretax profit was 2.2 million pounds, compared with a loss of 1.4 million pounds a year ago. Revenue rose 54 percent to 33 million pounds.

IQE, which had a net debt of 15.6 million pounds as on June 30, expects to reduce its net debt to 12.5-13 million in the second half of the year.

The company also said it expects capital expenditure of 5 to 8 million pounds in 2011.

Shares of IQE have gained nearly 46 percent since the beginning of the year. ($1=.6519 Pound) (Reporting by Juhi Arora in Bangalore; Editing by Jarshad Kakkrakandy)