DARPA COSMOS contract extension

IQE plc (AIM: IQE, "the Group") the leading manufacturer of advanced
semiconductor wafers to the global semiconductor industry, is pleased
to announce the commencement of Phase II of a major US Defense
Advanced Research Projects Agency (DARPA) contract led by Raytheon
Integrated Defense System to develop Compound Semiconductor Materials
on Silicon (COSMOS).

The epitaxial growth process is being developed at IQE's Pennsylvania
based manufacturing facility.

Phase I of the programme commenced in September 2007 with the goal of
developing and demonstrating a viable process to integrate compound
semiconductor materials with silicon in order to dramatically improve
linearity, dynamic range and bandwidth of radio frequency (RF)
devices.

Following the successful completion of the programme, phase II has
been awarded to focus on significantly improving both the yield and
density of the heterogeneous epitaxial growth of InP HBTs in
conjunction with conventional silicon based CMOS processes. The
overall program has a target of integrating high-performance compound
semiconductors with low-cost commercial complementary metal oxide
semiconductor silicon (CMOS) wafers to achieve superior cost-benefit
performance compared with either technology on its own.

"Selective placement of semiconductor compounds on silicon is an
important achievement because it proves that optimal circuit
performance can be produced through a heterogeneous, high-yield,
monolithic integration process," said Dr. Tom Kazior, program manager
at Raytheon IDS.

Steve Gergar, IQE's Vice President and General Manager in Bethlehem
PA said:

"IQE's continued role in this programme demonstrates our reputation
for expertise, experience and quality in advanced semiconductor
materials manufacturing processes for both current and future
applications and maintains our position at the forefront of leading
edge semiconductor materials technologies"

IQE is the world's largest contract epiwafer manufacturer with six
manufacturing sites across Europe, Asia and the USA.

Other partners in the COSMOS project are Raytheon Systems Limited in
Glenrothes, Scotland; Teledyne Scientific Imaging Company in Thousand
Oaks, Calif.; Massachusetts Institute of Technology in Cambridge,
Mass.; Paradigm Research LLC in Windham, N.H.; Soitec in Grenoble,
France; and Silicon Valley Technology Center in San Jose, Calif.

IQE: www.iqep.com
Raytheon: www.raytheon.com/

Contacts:

IQE Press/Investors ([phone])
Chris Meadows

IQE Technical ([phone])
Amy Liu


Note to Editors

IQE is the leading global supplier of advanced semiconductor wafers
with products that cover a diverse range of applications, 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, such as
mobile handsets and wireless infrastructure, Wi-Fi, 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, ultra high brightness LEDs, a variety of advanced silicon
based systems and high efficiency concentrator photovoltaic (CPV)
solar cells.

The manufacturers of these chips 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 also 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.

IQE operates six manufacturing facilities located in Cardiff (two)
and Milton Keynes in the UK; in Bethlehem, Pennsylvania and Somerset,
New Jersey in the USA; and Singapore. The Group also has 11 sales
offices located in major economic centres worldwide.


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