Year end trading update - 2007 revenues expected to be around $100m

17 January 2008

IQE plc (AIM: IQE, “the Group”), the leading global supplier of advanced wafer products and services to the semiconductor industry, is pleased to publish a trading update for the year to 31 December 2007.

Group revenues for the year are expected to be approximately US$100m, up around 65% in dollar terms year on year. This represents the third consecutive year of sequential revenue growth, averaging around 50% p.a.

Trading in December proved to be very strong following the successful qualification of products and tools with various customers across the Group, resulting in record revenues for the month. These and additional qualifications currently in progress also secure the foundations for significantly more production capacity in 2008.

EBITDA continued to increase from the first half of 2007, as a result of the good growth in revenue coupled with the Group’s high operational gearing and tight cost control, and is expected to be in line with market expectations, despite the adverse effect of the sterling/dollar exchange rate.

Sales of the Group’s wireless products have been particularly strong as a consequence of the Group expanding its customer base, product portfolio and geographical reach during 2007 and the acquisitions made during 2006 have performed extremely well. The majority of the Group’s customers are focussed on products for the advanced upgrade smart phone market, WiFi (802.11n), WiMAX, GPS and other high speed wireless markets. All of these have a high reliance on Compound Semiconductor based chips and have continued to show strong growth.

The Group has also made substantial progress in developing additional future high volume products, including advanced solar cells and solid state lighting, both of which are destined to play a major role in the global drive to a more environmentally friendly and sustainable energy model. In addition, the Group has established a leadership position in advanced materials combinations for ultra high speed integrated electronics applications.

The Board expects IQE’s markets to remain strong, particularly those linked to high speed wireless applications. The demand for such advanced technologies continues to grow as evidenced by the myriad of new and emerging applications at last weeks’ Consumer Electronics Show in Las Vegas.

IQE expects to publish its preliminary results for the year ended 31 December 2007 during the week commencing 17 March 2008.

 

Contacts:

IQE plc +44 (0)29 2083 9400 Drew Nelson Phil Rasmussen Chris Meadows

College Hill +44 (0)20 7457 2020 Adrian Duffield Jon Davies

Noble and Company + 44 (0) 20 7763 2200 John Llewellyn-Lloyd Sam Reynolds

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, high efficiency LEDs and a variety of advanced silicon based systems.

The manufacturers of these chips are increasingly seeking to source wafers from 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 supply 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.