Licence and Option Agreement

15 September 2015

IQE signs an Exclusive Licence and Option Agreement to acquire Translucent Inc.’s Unique ‘cREO™’ Technology

Cardiff, UK. 15 September 2015: IQE plc (AIM: IQE, “IQE” or the “Group”), the leading global supplier of advanced wafer products and wafer services to the semiconductor industry, announces that it has signed an agreement with Silex Systems Limited’s subsidiary, Translucent Inc. (“Translucent”), for the  exclusive licence of Translucent’s unique and innovative ‘Rare Earth Oxide’ (cREO™) semiconductor technology, and taken an option  to subsequently acquire the technology (the “Agreement”).  Translucent’s  cREO™ technology offers a unique approach to the manufacture of a wide range of innovative Compound Semonductor on Silicon products, including  gallium nitride (GaN) on silicon (Si) for the burgeoning Power switching and RF technologies markets.  It is protected by a wide ranging IP portfolio consisting of 74 granted patents, and 13 additional patent applications. 

Key terms of the Agreement:

  • IQE has signed an exclusive Licence and Assignment Agreement with Silex Systems Limited’s (“Silex”, ASX: SLX) subsidiary Translucent Inc.
  • The Agreement provides IQE with an exclusive 30 month licence for the commercialisation of the Translucent cREO™ technology and an exclusive option (exercisable solely at IQE’s discretion) on the subsequent acquisition of the cREO™ technology
  • IQE will pay Silex up to a maximum consideration of USD 1.5 million1, payable within six months of the date of the Agreement in either cash or IQE shares2,  for the  the licence and option agreement
  • The Agreement includes the transfer of a range of manufacturing and characterisation equipment from Translucent to IQE, and also includes the exclusive services of two key engineers for 12 months in order to  transfer the cREO™ technology to IQE. Translucent will then cease all operations in Palo Alto, California, their sole development site
  • Within the 30 month licence period, IQE has an exclusive option to acquire the cREO™ technology and IP portfolio for a consideration of USD 5 million, payable within 6 months following exercise of the option in either cash or IQE shares2. In addition, a long term royalty will be payable in cash to Translucent on the sale of IQE products which utilise the cREO™ technology transferred as follows: 3% on epi products, or 6% on cREO™ templates
  • All new IP generated relating to the technology will belong exclusively to IQE, as of today’s date
  • Should the licence expire after 30 months without IQE taking up the assignment option, or should the Agreement otherwise be terminated, all rights to the cREO™ technology that was transferred to IQE and the related equipment will revert to Translucent

1   USD 0.085m of the maximum USD 1.5m consideration is conditional upon certain delivery obligations being met

2   any share consideration would be calculated using a 5 day VWAP for the 5 trading days immediately preceding the applicable issue date

IQE CEO Dr Drew Nelson said:

“This is a first class deal and great opportunity for IQE. We are at the forefront of a new era in the semiconductor industry which is bringing to market unique high performance Compound Semiconductor materials required for the modern ‘Internet of Things’ world.  At the same time we are leveraging the low cost and large wafer size benefits of the silicon industry that has been at the core of the information technology revolution over the last 40 years. We are very excited to be able to take Translucent’s unique ‘cREO™’ technology to market, and thereby create a significant new platform to drive our business into several new large volume areas”.

Silex CEO Dr Michael Goldsworthy said: 

“This is a great outcome for Translucent, representing an excellent path to market for the cREO™ technology after an extensive research and development program over the past decade by our team in Palo Alto, California. IQE is the world’s leading epiwafer supplier, and epitaxy is the  key technology  for the introduction of new high performance materials required for the continued evolution of the global semiconductor industry. IQE is very well positioned to capitalise on the introduction of new semiconductor materials, and is the best commercial partner to take Translucent’s unique technology to market.”

 

Contacts:

IQE plc +44 (0) 29 2083 9400

Drew Nelson

Phil Rasmussen

Chris Meadows

 

Canaccord Genuity + 44 (0) 20 7523 8000

Simon Bridges

Cameron Duncan

 

Peel Hunt +44 (0) 20 7418 8900

Richard Kauffer

 

Broker Profile +44 (0) 20 3763 3400

Simon Courtenay

Harry Rippon

 

 

 

 

Note to Editors

 

About IQE 

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 ('epiwafers') 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, base stations, GPS, and satellite communications; and 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, thermal imaging, leading-edge medical products, pico-projection, finger navigation ultra-high brightness LEDs, and high efficiency concentrated 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 a number of manufacturing and R&D facilities across Europe, Asia and the USA. The Group also delivers its products and services through regional sales offices located in major economic centres worldwide.

  

About Silex Systems Limited

Silex Systems Limited (ASX: SLX) (OTCQX: SILXY) (“Silex”) is an Australian high-tech company focused on the delivery of its unique and disruptive ‘SILEX’ laser enrichment technology as the next generation technology for the global uranium enrichment industry. The SILEX Technology has been exclusively licensed to GE-Hitachi Global laser Enrichment, a business venture of GE (51%), Hitachi (25%) and Cameco (24%) based in Wilmington, North Carolina.

Until recently, Silex also had active interests in solar and semiconductor technologies. Under a restructure announced by the Silex Board in June 2014, a divestment process has been undertaken in order to return the Company’s focus to the SILEX Technology. For more information, refer to the Silex website at: www.silex.com.au.