Acquisition Completion

IQE PLC
08 January 2007

8 January 2007

IQE plc

IQE completes £7.5m acquisition of Singapore-based MBE

IQE plc ('IQE', 'the Group', AIM: IQE), the UK-based leading outsource supplier
of advanced wafers and outsource wafer services to the global semiconductor
industry, has completed the acquisition of MBE Technology Pte Ltd ('MBE'), a
Singapore based manufacturer of compound epitaxial ('epi') wafers for a total
cash consideration of S$23 million (£7.5 million).  The conditional agreement
was announced on 22 December 2006.



This acquisition is immediately earnings enhancing and completes the Group's
strategy to become the largest supplier of epi-wafers into chip manufacturers
for the global wireless industry.



The acquisition provides IQE with a very strong presence in Asia including
excellent links into Japan, Taiwan, China and Korea. IQE intends to use the new
base in Asia to aggressively sell into the Pacific Rim wireless industry. The
enlarged Group will also have the industry's broadest range of current and next
generation products, together with enhanced purchasing power for raw materials.



The consideration is based on an initial payment of S$11.5 million (£3.8
million) in cash and a further S$11.5 million (£3.8 million) by the issue to the
vendor of loan notes bearing interest of 6.5%. The loan notes are repayable in
three instalments in January 2008, June 2008 and January 2009.



Noble & Company Limited has placed 25 million new ordinary IQE shares ('New
Ordinary Shares') at 18p per share to raise approximately £4.5 million (before
expenses) to finance the cash consideration of the acquisition and working
capital (the 'Placing'). The New Ordinary Shares were admitted to trading on AIM
on 27 December 2006.



MBE, incorporated in Singapore 1993, is one of the leading independent global
manufacturers of compound semiconductor epi-wafers for use in very high-speed
electronic components in the wireless and optical telecommunications industries.
It has state-of-the-art facilities in Singapore and a strong team of management
and employees.



In 2006, MBE is expected to generate revenues in the order of US$15 million and
an EBITDA of over US$ 3.2 million.



MBE's growth and premier position are sustained by its strong customer base
across the Far East including a strategic supplier agreement with a substantial
Japanese electronics manufacturer.



Dr Drew Nelson, IQE Chief Executive, said:



'The addition of a manufacturing and formal sales base in the Far East
significantly increases our profile in the region and establishes a truly global
presence for the Group.




'MBE has established a strong customer base across the Far East, where demand
for epi-wafers continues to see strong growth, particularly for RF/wireless
products.  By being part of a larger group, MBE will have the support necessary
to exploit the regional opportunities by meeting the rapidly increasing demands
of the mobile communications sector.



'Following the successful integration of the EMD acquisition in mid 2006, I am
confident that the benefits of IQE's latest addition to the Group will quickly
add value to the whole business.'



Enquiries:

IQE plc  www.iqep.com.                                            02920 839400
    Dr Drew Nelson, Chief Executive
    Stuart Hall, Chief Finance Officer
    Chris Meadows, Investor Relations

Noble & Company Limited                                    [phone]
    John Llewellyn-Lloyd/ Sam Reynolds

College Hill
    Adrian Duffield/Ben Way                               [phone]





Note to Editors



IQE is the leading global outsource supplier of advanced semiconductor wafers,
with products that cover the whole spectrum of wafer structures, supported by an
innovative outsourced foundry services portfolio that allows the Group to
provide a 'one stop shop' for the wafer needs of the world's leading
semiconductor manufacturers



IQE uses advanced crystal growth technology (epitaxy) to manufacture and supply
bespoke semiconductor wafers ('epi-wafers') to the major chip manufacturing
companies, who then use these wafers to make the chips which form the key
components of virtually all high technology systems.  IQE is unique in being
able to supply wafers using all of the leading crystal growth technology
platforms.



IQE's products are found in many leading edge consumer, communication, computing
and industrial applications, including a complete range of wafer products for
the wireless industry, including mobile handsets and wireless infrastructure,
WiFi, WiMAX, base stations, GPS, and satellite communications; optical
communications, optical storage (CD, DVD), laser optical mouse, laser printers &
photocopiers, thermal imagers, leading edge medical products, barcode, high
efficiency LEDs and a variety of advanced silicon based systems.



These manufacturers are increasingly seeking to outsource wafer production to
specialist foundries such as IQE, in order to reduce overall wafer costs and
accelerate time to market.



IQE provides bespoke R&D services to deliver customised materials for specific
applications and offers specialist technical staff to manufacture to
specification either at its own facilities or on the customer's own sites.  The
Group is also able to leverage its global purchasing volumes to reduce the cost
of raw materials.  In this way IQE's outsourced services, provide compelling
benefits in terms of flexibility and predictability of cost, thereby
significantly reducing operating risk.



Following the acquisition, IQE employ around 320 people and operate six
manufacturing facilities located in Cardiff (two) and Milton Keynes in the UK,
and in Bethlehem, Pennsylvania and Somerset, New Jersey in the USA, and
Singapore.  The Group also has nine sales offices located in major economic
centres worldwide.



Glossary



Epiwafer: A wafer of semiconducting material (made by a crystal growth process
called epitaxy) for use in the manufacture of microelectronic devices.  Two
methods of growing the epitaxial layer on existing silicon or other wafers are
currently used: metal organic chemical vapour deposition (MOCVD) and molecular
beam epitaxy (MBE).  These wafers are typically newer types of semiconductors
comprising some combination of the elements gallium, indium, aluminum, nitrogen,
phosphorus or arsenic.



Semiconductor: A solid whose electrical conductivity can be controlled over a
wide range, either permanently by introducing impurities ('doping') or
dynamically by applying electric fields.  Semiconductor devices with dynamically
controlled conductivity are the building blocks of integrated circuits, such as
microprocessors.  Semiconductors may be elemental materials such as silicon and
germanium, or compound semiconductors which comprise more than one element such
as gallium arsenide or alloys such as silicon germanium or aluminium gallium
arsenide.



Wafer: a thin slice of semiconducting material upon which microcircuits are
constructed.  Wafers are thus of key importance in the fabrication of
semiconductor devices such as integrated circuits.  Typically they are made in
various sizes ranging from 1 inch (25.4 mm) to 11.8 inches (300 mm), and
thicknesses of the approximately 0.5 mm.



RF: Radio Frequency components such as amplifiers, receivers and modulators,
which are designed to operate in the microwave and wireless ranges of the
electromagnetic spectrum.




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