Supplier Agreement

IQE PLC
18 October 2006


For Immediate Release                                           18 October 2006


                                     IQE plc

                          (the 'Company' or 'IQE')

                   New 'Strategic Supplier' selection for IQE


IQE, the leading worldwide outsource supplier of customised wafer products and
outsource wafer services to the global semiconductor industry is pleased to
announce that it has signed a Memorandum of Understanding with a leading
European RF wireless chip foundry. The agreement concerns the supply of IQE's
epi-wafers to be used in their RF wireless switch products. The intention of the
memorandum is that the customer will utilise IQE as its preferred external
supplier of epi-wafers to complement their existing in-house epi-wafer capacity.
As the customer's own product demand increases, it is anticipated that any
increase in epi-wafer requirements beyond the customers internal capacity will
flow directly to IQE as the customer's preferred external source.


Commenting on the agreement Dr Drew Nelson, CEO of IQE plc, said, 'IQE is very
pleased to announce a new outsource arrangement with another leading supplier of
RF chips to the global wireless industry, having worked closely with the
customer over the last twelve months to achieve fully 'qualified supplier'
status. We will be working closely with the customer to fully realise all the
benefits of such an outsource arrangement to enable significant commercial
benefits to accrue to both parties. Again, this demonstrates the strength of the
outsource model, which is now becoming a key part of customers strategic
considerations.'

For further information, please contact:

IQE plc                                              [phone]
Dr Drew Nelson, President & CEO
Stuart Hall, CFO
Chris Meadows, Investor Relations

Noble & Company Limited                              [phone]
John Llewellyn-Lloyd
Graeme Bayley


Buchanan Communications                              [phone]
Tim Thompson
Nicola Cronk


About IQE

IQE is now the leading provider of outsource epitaxial wafer services to the
global semiconductor industry. Its wafer products include a portfolio of
compound semiconductor wafers for use across the whole spectrum of opto
electronic and wireless applications, a range of advanced compound semiconductor
substrates, and a comprehensive epi service of advanced products for the silicon
industry. The IQE Group operates state of the art manufacturing facilities
utilizing all of the key crystal growth technologies, with facilities located in
Cardiff and Milton Keynes, UK and in Bethlehem, Pennsylvania and Somerset, New
Jersey USA. IQE's products are found in a diverse range of leading edge
consumer, communication, computing and industrial applications, including a
complete range of wafer products for the wireless industry, including mobile
handsets and wireless infrastructure, optical communications, optical storage
(CD, DVD), laser optical mouse, laser printers & photocopiers, thermal imagers,
leading edge medical products, barcode, high efficiency LEDs and a variety of
advanced silicon based systems. For further information about the IQE Group,
please visit http://www.iqep.com.




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