Trading Statement

IQE PLC
15 February 2002

                                                 15 February 2002



                         IQE plc ('the Group' or 'IQE')
                                  Trading Update

The Board of Directors of IQE ('the Board'), the largest outsource manufacturer
of specialist epiwafers to the compound semiconductor industry, announces a
trading update ahead of the Group's fourth quarter and preliminary results
announcement to be made on 20 March 2002, against the background of continuing
uncertainty in the semiconductor markets.

The current trading environment continues to be extremely challenging,
particularly in the opto-electronic sector and the Board do not consider that
there will be any noticeable upturn until the second half of 2002. Component
manufacturers who are the main users of the Company's wafer products in this
sector continue to suffer from low demand and excess inventories as end user
capex spend continues to fall.

For the quarter ended 31 December 2001, the Group's turnover is likely to be
reported at the lower end of the market's expectations resulting in a turnover
for the full year to 31 December 2001 of around £42 million.

Although the two principal markets of opto-electronics and wireless have
remained depressed for most of the last 12 months, the revenue for full year
2001 is nonetheless likely to show some 40 per cent. increase over the full year
2000. At the pre tax level, and following an increased R+D spend to accelerate
development of the exciting new technologies the Company has, such as GaAs on
Silicon and Silicon Germanium, the Group expects to announce a net loss before
amortisation and exceptionals for the fourth quarter of 2001 of between £3.5m
and £3.8m.  The net loss before amortisation and exceptionals for the full year
to 31 December 2001 is therefore likely to be in the region of £3.3m to £3.6m.


Outlook

Looking forward, in the first quarter of 2002 IQE has continued to experience an
extremely difficult trading environment due to the ongoing decline in the
opto-electronic communications industry and the fitful recovery in the wireless
sector. Although other areas of the business are moving ahead, such as optical
storage and silicon compounds, where successful qualifications are continuing to
be completed, the production ramp in these areas is not swift enough to offset
the decline in the optical communications products.

As a result, the Group anticipates trading for the first quarter of 2002 to be
lower than in Q4 2001, with a steady improvement in trading expected to flow
through in the second half of the year.

The Company continues to make good progress with materials under R&D,
particularly with the GaAs on Silicon Technology on which it has an exclusive
wafer supply licence from Motorola, and with Silicon Germanium (SiGe) based
products.

Following the placing and open offer of IQE's shares undertaken in December
2001, when the Group raised approximately £27.5 million (after expenses), the
Group has a healthy cash position of around £30 million. The Board believes that
as the semiconductor industry recovers, together with the exceptionally exciting
opportunity open to the Group as a result of its agreements with Motorola
relating to the commercialisation of the GaAs on Silicon Wafers, and as
outsourcing becomes a much more significant part of the compound semi-conductor
industry, IQE is well placed to consolidate its position as the leading
outsource wafer manufacturer within the semiconductor industry.

Commenting, Dr Drew Nelson, President and CEO, said

'Although trading remains very difficult at the present time, IQE has continued
to build a very powerful product portfolio. This is helping to create some
unique opportunities for the Company, such as exclusivity to the GaAs on Silicon
technology licensed from Motorola.  Our cash position is strong, we are keeping
a tight control on costs and we do not require high levels of ongoing capex to
increase revenue significantly.  As the market returns across the various
semiconductor sectors, we feel IQE is uniquely placed to benefit, particularly
as we believe outsourcing is poised to become a key theme with many companies. '



For further information, please contact:


Dr Drew Nelson, IQE                                  02920 839 400

Graham Meek, Beeson Gregory                          020 7488 4040

Tim Thompson or Nicola Cronk, Buchanan               020 7466 5000
Communications







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