IQE to acquire NanoGaN to accelerate commercial...

5 October 2009

IQE plc

("IQE", the "Company" or "the Group")


IQE plc (AIM: IQE), the leading global supplier of advanced wafer
products and wafer services to the semiconductor industry, is to
acquire UK based NanoGaN Limited ("NanoGaN").

NanoGaN has established a range of unique processes and key
intellectual property relating to gallium nitride (GaN) materials and
devices. This includes its proprietary Nanocolumn Technology for
producing high quality, free-standing gallium nitride substrates,
which are critical for manufacturing high quality blue and green
semiconductor lasers and ultra high brightness LEDs for Solid State
Lighting (SSL).

The development of NanoGaN's proprietary technology is at an advanced
stage. IQE will assist in completing the development of commercial
products and will thereafter begin the transfer of the technology to
its high volume production facilities where it is expected to begin
generating sales in 2010, followed by rapid sales growth as the
technology is commercialised.

The acquisition complements and enhances IQE's existing product
portfolio by accelerating the Group's strategic plans to develop a
leadership position in the emerging high growth markets for advanced
laser projection, high definition optical storage (including Blue Ray
products), high resolution laser printing and solid state lighting
for industrial, commercial and residential lighting. NanoGaN's core
technology will also be used to further enhance IQE's leading
position in the supply of GaN products for high power RF
applications.

The deal also strengthens IQE's position as a technology leader by
bringing powerful new intellectual property to the group, and
exciting new talent.  NanoGaN brings with it seven filed patents, and
several additional innovations for which patents will be submitted.

As part of the deal, Professor Wang, the CEO of NanoGaN and inventor
of the nanocolumn technology will become Chief Scientific Advisor to
IQE. Professor Wang is widely acknowledged as a world leading
advanced materials scientist with significant commercial and advisory
experience. He was co-founder of Arima Optoelectronics Corporation, a
leading optoelectronics company listed on the Taiwan Stock Exchange.
Professor Wang has a history of successfully patenting innovative
technologies. Many of his 26 granted patents continue to be used for
mass production within the optoelectronics industry.  He has also
acted in advisory roles, including Scientific Advisor to the ITRI
(Industrial Technology Research Institute) of Taiwan and to the
Taiwanese Government.

The consideration for the acquisition of NanoGan is for up to £3.6m,
based on the achievement of milestones relating to the
commercialisation of the intellectual property.  The initial
consideration of £0.4m will be settled by the issue of new shares and
cash. IQE has the option to settle the future milestone payments in
either shares or cash.

Completion of the acquisition will take place upon admission to
trading of those new shares to be issued in satisfaction of part of
the initial consideration, expected to be on or around 7 October
2009.


Commenting, Dr Drew Nelson, IQE Chief Executive Officer said :

"The acquisition of NanoGaN represents a major milestone in our
technology roadmap, and reinforces our strategy of being a powerful
IP based technology leader in the supply of advanced semiconductor
materials to a multitude of high growth markets.

"This acquisition provides a perfect complement to our existing
wireless and opto, and emerging solar businesses and widens our
product portfolio.We now operate in a range of diverse international
markets, all with powerful  drivers including high growth consumer
applications and political and legislative trends towards
technological solutions to address environmental challenges"

"Current trading across the group continues to be strong and the
Board remains confident of meeting market expectations for the full
year 2009."



Commenting, Professor Wang Nang Wang said:

"NanoGaN has reached a very exciting stage of development. Our
Nanocolumn technology provides a unique approach to overcoming the
challenges facing the advancement of blue and green laser technology,
high density optical storage and ultra high efficiency solid state
lighting.

"This transaction represents a unique opportunity for the
commercialising of NanoGaN's world leading technology and cements our
long term relationship with IQE.  We carefully selected IQE as the
ideal partner to bring our intellectual property to mass production
based on its track record and its experience. In addition I am
extremely excited to accept the position of Chief Scientific Advisor
to the IQE Group, to help further advance their powerful portfolio of
IP based production technology for advance semiconductor materials"


Contacts:

IQE plc ([phone])
Drew Nelson
Phil Rasmussen
Chris Meadows


Noble & Company Limited (+ 44 20 7763 2200)
John Llewellyn-Lloyd
Sam Reynolds

College Hill ([phone])
Adrian Duffield
Carl Franklin










NOTE TO EDITORS

About IQE (www.iqep.com)

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, ultra high brightness LEDs, a variety of advanced silicon
based systems 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 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.


About NanoGaN Limited (www.nanogan.com)

NanoGaN is a venture formed between Professor Wang Nang Wang, Bath
University and a number of financial backers.  NanoGaN's IP includes
its proprietary Nanocolumn Technology as a means of developing high
quality Free Standing Gallium Nitride substrates which are critical
for blue and green laser technology, and ultra high brightness LEDs.

In addition to a distinguished academic career, Professor Wang has
established a solid business reputation within the technology sector
having served as Chairman and President of Quantum Optech Inc and as
co-founder of Arima Optoelectronics, both based in Taiwan.

IQE has enjoyed a long standing association with NanoGaN having been
selected as a key strategic epitaxial materials partner by Professor
Wang. The development of NanoGaN's unique Nanocolumn technology is at
an advanced stage and is expected to generate initial sales during
2010, followed by rapid sales growth as the commercialisation is
completed.

In conjunction with this acquisition, IQE is pleased to announce that
Professor Wang has accepted appointment as Chief Scientific Advisor
to the IQE Board.  This is detailed in a separate announcement.

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