IQE wins a further significant 5 year full outsource contract

27 Jan 2006


IQE plc ("IQE" or "the Group"), a leading global outsource supplier of customised wafers to the semiconductor industry, is pleased to announce a further significant full outsource contract win.

Following an extensive period of evaluation, qualification and production testing, IQE Silicon, one of the four subsidiary company's of IQE plc, has signed a five year outsource contract with a major US based chip manufacturer. Under the terms of the agreement, IQE will become solely responsible for all of the production, development and logistics of the customer's epi based products. The contract will be effective as of 1st January 2006, and is expected to be worth at least $2 million to the Group during the current financial year. Subsequently, this is expected to grow significantly as a larger percentage of the customer's products become epi based from the current non epi based technology. Overall therefore the contract is likely to be worth in excess of $10 million in revenues to IQE over the term of the contract. IQE won the contract as a result of its first class production performance, demonstrating outstanding quality of product and cycle time metrics, two of the most critical performance criteria of the customer.

This contract win supports a growing full outsource trend, whereby customer's recognise the significant benefits accruing by partnering with IQE, for all of their epi needs. Production risks are virtually eliminated by IQE's unique approach to providing a full outsource service, tailored precisely to each customers' individual circumstances. Since IQE concentrates all its activities on its wafer outsourcing strategy, customers benefit significantly from the unrivalled level of technical expertise existing within the Group, the Group's overall purchasing power, and IQE's customer centric and highly flexible outsource service.

Existing full outsource contracts are performing extremely well, with customers invariably benefiting from the technical and commercial benefits of the full outsource arrangements. The largest of these contracts, signed over a year ago, is likely to generate revenuew for the Group of some $15 million in 2006, as the customer has been able to increase their market share significantly. Others are finding similar benefits to their ongoing businesses.

As a result of a number of such outsource arrangements, IQE is now growing increasingly confident of its forward visibility, as detailed further in the pre-close trading statement separately announced today.

Commenting, Dr Drew Nelson, IQE plc CEO said "This important contract win once again clearly demonstrates our customers' confidence in the quality and service of the outsource model provided by IQE. As a result of this service they are able to compete extremely effectively in their target markets. As epi based production becomes a dominant part of this new customer's product range, they will benefit even more significantly in the future, a key consideration in their decision to have IQE solely responsible for this critical part of their process."
 

For further information, please contact :

IQE plc :
Drew Nelson +44 (0)2920-839400
Stuart Hall +44 (0)2920-839400
Chris Meadows +44 (0)2920-839400

Buchanan Communications :
Tim Thompson/Nicola Cronk +44 (0)2074-665000