Trading Update

IQE PLC
30 May 2006


Immediate release                                                 30 May 2006



                                    IQE plc


                   Trading Update pre Annual General Meeting

                to be held at Cardiff on 31 May 2006 at 10.00am


                           'Continued strong growth'



IQE plc (the Group), the leading global supplier of customised wafer products
and outsource wafer services to the semiconductor industry, is pleased to
provide a pre Annual General Meeting Trading Update.


Commenting on the Group's performance, Dr Drew Nelson, President and CEO said :


'Trading has been very strong since the start of the year, with sales in the
first quarter up 19% on Q4/2005 and up 53% on Q1/2005.


All parts of the custom epitaxy business have continued to show strong growth in
2006. The wireless sector is particularly strong, driven by the continuing
demand for mobile handsets and infrastructure projects such as wireless LAN and
Wi Fi. The mobile handset market is predicted to grow by an additional 15% in
2006 and the Group will benefit greatly from this growth through increased
demand for its gallium arsenide materials. In addition, the greater
sophistication of handsets with much more functionality and multiple radio
frequency components in each unit will only add to this demand.


The Group's major outsourcing contracts are all performing ahead of expectations
and the accelerated qualifications carried out in H2/2005 have now moved into
full production. New qualifications continue well, including several in the Far
East.


The opto electronics marketplace is also showing considerable strength, and the
Group's Vertical Cavity Surface Emitting laser products are finding rapidly
growing markets in short distance communications, laser printing and copying,
and laser mouse applications. The markets for IQE Silicon and Wafer Technology
are also showing good strength.


The growth which we are experiencing has increased our working capital
requirements. In anticipation of this, we secured a working capital facility of
£5m from our bankers towards the end of 2005 in the form of a £3m loan and a £2m
overdraft facility. The loan was fully drawn down in December. The overdraft
facility has not been utilized. The Board is confident that its existing cash
resources and the overdraft facility will together provide sufficient funds to
support our organic growth expectations.


Although there has been a substantial weakening of the US dollar in recent weeks
of around 7% compared with Q4/2005 which has inevitably had an impact on our
sales revenue, that impact is somewhat less than it would have been in the past
because of the natural hedge provided by the higher percentage of the cost base
now being denominated in US dollars. Notwithstanding this, we continue to
control our costs very rigorously and implement new cost saving measures
wherever practicable


We are now moving into a situation in the market where outsourcing is featuring
more prominently in many companies' strategic considerations because the
semiconductor industry is now becoming capacity limited in several areas. We see
this as an advantage to the Group as our breadth of product range, large scale
production capacity and economies of scale are key considerations in attracting
new business. We therefore look forward to continued strong growth as the
Group's capacity utilisation continues to increase and the industry continues to
expand'.



Contacts:


IQE plc :
Drew Nelson                              [phone]
Stuart Hall                              [phone]
Chris Meadows                            [phone]

Buchanan Communications :
Tim Thompson                             [phone]



                      This information is provided by RNS
            The company news service from the London Stock Exchange