Contract Win

IQE PLC
27 January 2006


For Immediate Release                                          27th January 2006

                                    IQE plc

         IQE wins a further significant 5 year full outsource contract

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                                     [phone]
Stuart Hall                                     [phone]
Chris Meadows                                   [phone]

Buchanan Communications :
Tim Thompson/Nicola Cronk                       [phone]




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