Acquisition

IQE PLC
20 July 2006


IQE plc


Embargoed for release until 7 a.m. UK time on 20 July 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 conditionally agreed
to acquire Electronic Materials Division ('EMD'), the US epi foundry business
from EMCORE Corporation Inc. (NASDAQ listed: EMKR) ('EMCORE').

Key details of the acquisition:

  • IQE has conditionally agreed to acquire the business and assets of EMD
    from EMCORE

  • For the financial year ended 30 September 2005, EMD's total revenue was
    $12.2 million, EBITDA was $0.1 million and the value of assets was $9.0
    million. The business has continued to grow strongly in the current
    financial year

  • IQE will acquire the assets and business of EMD for a total of $16 million, 
    payable as to $13 million in cash on completion and a further $3 million in 
    cash payable in four equal quarterly payments commencing three months after 
    closing.  The deferred consideration will bear interest at 7.5 per cent. 
    per annum

  • The acquisition will create 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, will be
    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 has conditionally placed 87.5 million IQE shares at 13.75p per share
    to raise approximately £12 million (before expenses) to finance the
    consideration and working capital (the 'Placing').  The Placing is
    conditional upon, inter alia, the passing of a shareholder resolution at an
    extraordinary general meeting (''EGM'') to be held on 15 August 2006.


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 will position 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.


Details of the Placing and EGM

The fundraising is to be effected by means of a placing of 87.5 million new
ordinary shares of 1p each in the capital of the Company (''New Ordinary
Shares'') at an issue price of 13.75p per New Ordinary Share (the 'Placing 
Price'). The New Ordinary Shares have been conditionally placed by Noble with 
certain new and existing investors.

The Placing is conditional upon the passing of a resolution (the 'Placing
Resolution') by the Company's shareholders at an EGM to authorise the allotment
of the New Ordinary Shares and to disapply pre-emption rights to enable the
Directors to allot the New Ordinary Shares for cash to persons other than
current shareholders in the Company. The Directors have convened the EGM at
which shareholders will be asked to consider and, if thought fit, pass the
Placing Resolution and certain other resolutions. The Placing is also
conditional, inter alia, on admission (''Admission'') of the New Ordinary Shares
to trading on AIM, a market operated by London Stock Exchange plc (and is the
market on which the Company's existing issued ordinary shares are admitted to
trading) occurring by no later than 31 August 2006. The New Ordinary Shares are
equivalent to approximately 21.6 per cent. of the Company's enlarged ordinary
share capital following Admission and the Placing Price represents a discount of
approximately 6.8 per cent. to the closing mid-market price of an existing
issued ordinary share of 14.75p on 19 July 2006, the latest practicable date
prior to the release of this announcement.

It is expected that, following the passing of the Placing Resolution at the EGM,
dealings in the New Ordinary Shares will commence on or around 16 August 2006.
Subject to the passing of the Placing Resolution and Admission becoming
effective not later than 31 August 2006, the New Ordinary Shares will be issued
and will rank pari passu with the existing ordinary shares in the Company. The
EGM is to be held at 9:00 a.m. on 15 August 2006 at the Company's offices at
Pascal Close, St Mellons, Cardiff, CF3 0LW, at which, inter alia, the Placing
Resolution will be proposed.

Dr Drew Nelson, President & CEO of IQE plc commented: 'This acquisition
represents a significant opportunity for IQE to enhance its leading position as
the global supplier of customised wafer products and outsource wafer services to
the semiconductor industry, and to create significant shareholder value through
the synergistic benefits obtained through combining the two businesses. The
addition of EMD's products, employees and intellectual property will clearly
enhance IQE's position as the leading player in the epitaxial foundry industry.
EMD's current and next generation products are extremely complementary to IQE's
product base and its customer base will increase IQE's customer reach to a broad
spectrum of world class RF manufacturers.  With both MOCVD and MBE wireless
platforms, as well as diverse range of MOCVD based optical products, IQE will be
able to offer its customers the broadest and most advanced range of technologies
and products in the semiconductor industry.'

Commenting, Scott Massie, Chief Operating Officer of EMCORE said 'EMD has been
an innovator in developing state of the art RF materials for over 10 years but
as we continue to focus our strategy on broadband infrastructure, solar power
and value-added products, it became clear we needed to find a more strategic fit
for EMD's products and employees'.  Mr. Massie added, 'The sale of this division
will lower our cost base, improve gross margins company-wide and permit us to
further consolidate operations in New Mexico and California.'


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

EMCORE Corporation
Tom Werthan, Chief Financial Officer                           [phone]



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.
The IQE Group 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.


About EMCORE

EMCORE Corporation offers a broad portfolio of compound semiconductor-based
products for the broadband, fiber optic, satellite, solar power and wireless
communications markets. EMCORE's Fiber Optic segment offers optical components,
subsystems and systems for high speed data and telecommunications networks,
cable television (CATV) and fiber-to-the-premises (FTTP). EMCORE's Photovoltaic
segment provides products for both satellite and terrestrial applications.  For
satellite applications, EMCORE offers high efficiency Gallium Arsenide (GaAs)
solar cells, Covered Interconnect Cells (CICs) and panels. For terrestrial
applications, EMCORE is adapting its high-efficiency GaAs solar cells for use in
solar concentrator systems. Through its joint venture participation in GELcore,
LLC, EMCORE plays a significant role in developing and commercializing
next-generation High-Brightness LED technology for use in the general and
specialty illumination markets. For further information about EMCORE, visit
http://www.emcore.com.



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