Acquisition

IQE PLC
21 August 2006


IQE plc

Embargoed for release until 7am, 21 August 2006

21 August 2006

                                    IQE plc

                          (the ''Company'' or ''IQE'')

                                  Acquisition


IQE, the leading global outsource supplier of customised wafer products and
outsource wafer services to the semiconductor industry, has completed the
acquisition of the Electronic Materials Division ('EMD'), the US epi foundry
business from EMCORE Corporation Inc. (NASDAQ listed: EMKR) ('EMCORE').


Key details of the acquisition

IQE has acquired the assets and business of EMD for a total of $16 million. The
total consideration is based on an initial payment of $13 million in cash and a
further $3 million in cash payable in four equal quarterly payments.  The
deferred consideration will bear interest at 7.5 per cent. per annum

The acquisition has created the leading global outsource supplier of epi wafers
to the wireless market, providing significant opportunities to accelerate sales
into existing and new customers by providing the broadest range of current and
next generation products

All of EMD's employees, including its strong management team, have been offered
employment with IQE and it is the intention of the Board that the EMD business
will continue to be run as a stand alone entity in New Jersey

Noble & Company Limited has placed 87.5 million new ordinary IQE shares ('New
Ordinary Shares') at 13.75p per share to raise approximately £12 million (before
expenses) to finance the consideration and working capital (the 'Placing').  The
new ordinary shares were admitted to trading on AIM on 16 August 2006

Following the passing of the resolutions put to the shareholders at the
Extraordinary General Meeting held on 15 August 2006, admission of the New
Ordinary Shares to trading on AIM on 16 August 2006, and settlement of funds
with EMCORE IQE has now completed the acquisition


Details of the business

EMD provides foundry based production of high performance compound semiconductor
electronic epitaxial materials, with a focus on the wireless markets. EMD is
based in the US, has approximately 50 employees, ten advanced epitaxial tools
and is one of the top five third-party suppliers of epi wafers in the world.

EMD has pursued a similar strategy to that of IQE, in building a strong
outsource foundry model for the supply of epi wafers.  They have concentrated on
HBT based technologies for power amplifier applications, as well as integrated
BiFET and GaN structures, and consequently supply a range of highly
complementary products to a range of customers different to that of IQE's own
customer base.

The acquisition positions IQE as the leading global outsource supplier of
current and next generation products into the wireless marketplace including
PHEMT, HBT, integrated BiFET and advanced GaN technologies. The Directors
believe this will create significant opportunity to grow revenues within
existing IQE and EMD customers by offering all major technology platforms to the
enlarged customer base, from the largest, state of the art production capacity
in the industry.

Dr Drew Nelson, President & CEO of IQE plc commented:  'We are very happy to
have completed this acquisition, which represents a key step forward in IQE's
development as the leading outsource wafer supplier worldwide to the global
semiconductor industry.  The joining of the two companies allows IQE to offer a
truly one stop wafer outsource service to its customers, with a complete range
of current and next generation products. This transaction assures EMD's current
customers that as part of a larger wafer outsource group all the necessary
resources are in place to fully support the joint customer base as their wafer
demands continue to grow.'


Contacts

IQE plc                                        [phone]
Dr Drew Nelson, President & CEO
Stuart Hall, CFO
Chris Meadows, Investor Relations

Noble & Company Limited                        [phone]
John Llewellyn-Lloyd
Graeme Bayley


About IQE

IQE is a leading provider of outsource epitaxial wafer services to the global
semiconductor industry. Its wafer products include a portfolio of compound
semiconductor wafers for use across the whole spectrum of opto electronic and
wireless applications, a range of advanced compound semiconductor substrates,
and a comprehensive epi service of advanced products for the silicon industry.
IQE operates state of the art manufacturing facilities utilizing all of the key
crystal growth technologies, with facilities located in Cardiff and Milton
Keynes, UK and in Bethlehem, Pennsylvania , USA. IQE's products are found in a
diverse range of leading edge consumer, communication, computing and industrial
applications, including mobile handsets and wireless infrastructure, 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. For further
information about the IQE Group, please visit http://www.iqep.com.




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