Strategic investment in, and exclusive wafer supply agreement with, Solar Junction Corporation, a leading edge CPV cell developer

08 February 2012

Strategic investment in, and exclusive wafer supply agreement with, Solar Junction Corporation, a leading edge CPV cell developer

Cardiff, UK, 8 February 2012: IQE plc (AIM: IQE, “IQE” or the “Group”), a leading global supplier of advanced semiconductor wafer products and services to the semiconductor industry, has signed a strategic investment agreement and an exclusive wafer supply agreement with leading edge Concentrated PhotoVoltaic (“CPV”) cell developer and manufacturer Solar Junction Corporation (“SJC”) (the “Agreement”). The investment is expected to significantly accelerate IQE’s strategy to become a leading global supplier of CPV wafers for the solar power markets.
IQE also announces that it intends to place 43,750,000 new ordinary shares to raise £10.5 million gross (the “Placing”). The net proceeds will be used to fund a 9 per cent. equity investment in SJC, the purchase of dedicated high volume molecular beam epitaxy (“MBE”) production tools, the cost of ancillary quality control equipment and to establish initial wafer manufacturing at IQE.

Commercial highlights
• SJC has developed unique patent pending technology for producing high efficiency CPV solar cells. It holds the world record cell efficiency of 43.5 per cent.
• IQE will be SJC’s strategic and exclusive epitaxy (“epi”) partner, enabling SJC to benefit from IQE’s strong materials intellectual property (“IP”) and expertise in high volume epi wafer manufacturing
• SJC is in qualification with major CPV systems companies – SJC is close to full International Electrotechnical Commission (“IEC”) certification with its lead customer
• IQE secures a partnership for developing CPV technology with SJC and exclusive access to SJC’s on-going extensive R&D programme
• Market for CPV solar power wafers is at an inflection point and is expected to grow to 1.5GW (gigawatts of energy output) from CPV by 2015 (Source: Strategy Analytics and Green Tech Media)

Placing highlights
• Espirito Santo Investment Bank and Canaccord Genuity Limited (together the “Bookrunners”) announce a placing of 43,750,000 shares (“Placing Shares”) at a price of 24 pence per placing share (the “Placing Price”) to raise £10.5 million (gross)
• Net proceeds will be used to : Fund 9 per cent. equity investment in SJC - approximately $5 million Purchase high volume MBE production tools dedicated to SJC – approximately $8 million Fund the cost of ancillary quality control equipment, process transfer and to establish     initial wafer manufacturing at IQE - approximately $2 million

The appendix to this announcement contains the detailed terms and conditions of the Placing.

Dr Drew Nelson, IQE’s Chief Executive, said:
“This is a potentially transformational opportunity. It is expected to facilitate a significant acceleration in our well established CPV strategy and it provides us with an outstanding opportunity to become a key epi supplier to the CPV market. This market has reached an inflection point in terms of cost comparisons with fossil fuels and is promising impressive growth potential.
“Solar Junction has developed a world beating technology that significantly increases cell efficiency, a crucial factor in the economics of CPV systems and key to success in this market.
“This investment also brings us access to Solar Junction’s well-funded R&D. A combination of Solar Junction’s core materials IP and technology, together with our own IP and manufacturing capabilities, provides a compelling route to significantly higher cell efficiency and cost effective, high volume production.
“Our current trading remains in line with expectations. Our year end results are due in late March 2012. We look forward to developing our CPV offering further alongside our strongly growing opto-electronic business and our well established wireless-related products used in a wide range of mobile communications devices.”

(Click HERE to read regulatory news Announcement for full placing details)

IQE plc (+44 29 2083 9400) Drew Nelson Phil Rasmussen Chris Meadows
Espirito Santo Investment Bank (+ 44 20 7456 9191) Richard Crawley James Bromhead
Canaccord Genuity (+ 44 20 7050 6500) Simon Bridges Cameron Duncan
College Hill (+44 20 7457 2020) Adrian Duffield Kay Larsen


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. The Group also manufactures advanced optoelectronic and photonic components such as semiconductor lasers, vertical cavity surface emitting lasers (VCSELs) and optical sensors for a wide range of applications including optical storage (CD, DVD, BluRay), thermal imaging, leading-edge medical products, pico-projection, finger navigation ultra high brightness LEDs, 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 eight facilities located in Cardiff (two), Milton Keynes and Bath in the UK; in Bethlehem, Pennsylvania, Somerset, New Jersey and Spokane, Washington in the USA; and Singapore. The Group also has 11 sales offices located in major economic centres worldwide.