Half Year Trading Statement

Continuing strong growth in high speed wireless markets drive
revenues and profits ahead of market expectations

IQE plc (AIM: IQE, "IQE" or the "Group") the leading global  supplier
of advanced semiconductor  wafer products and  wafer services to  the
semiconductor industry, is providing a  trading update for the  first
half ended 30  June 2008 ahead  of the expected  announcement of  its
interim results on 2 September 2008.

The strong  first quarter  growth reported  in the  2007  preliminary
announcement on 17  March 2008  has continued  throughout the  second
quarter.   The   Board  therefore   anticipates  that   the   Group's
performance will  be ahead  of market  expectations, with  the  Group
expecting to achieve revenue for the first half of around £30 million
and EBITDA (before exceptional items) of at least £3.3 million.  This
reflects organic growth in revenues and EBITDA  of over  26% and 115%
respectively compared with  the first  half of  2007. Robust  working
capital management and strong cash conversion has contributed to cash
balances in excess of £1 million as at 30 June 2008.  With a  further
£9  million  of  working  capital  facilities  available,  the  Board
considers IQE to be well placed to fund further growth.

This financial performance  reflects the  continued and  increasingly
successful execution of IQE's strategy.    The Group has developed  a
market leading position, with  significant competitive advantages  in
high  growth  markets.   In   particular,  IQE's  multi-site   global
manufacturing  capabilities  and  its  technology  leadership,   have
enabled it to increase  its share of the  fast growing high speed  3G
wireless communications and mobile broadband markets.

This trading update follows  two recent announcements which  underpin
the  Board's  confidence  that  this  rapid  growth  is  expected  to
continue. Firstly, the  extension of  a sole supply  contract with  a
major US wireless chip maker, which is expected to generate  revenues
of approximately $20 million over the next two years, and secondly, a
record $20 million order book from its New Jersey facility, following
the influx of orders from a number of major customers.

The Group  is continuing  to  bring on  line additional  capacity  at
several locations  as  demand  continues to  thrive.  The  successful
transfer  of   technology   and  production   between   the   Group's
manufacturing facilities has allowed  customers to benefit from  this
additional capacity  and multiple  site manufacturing.   Furthermore,
the relocation to the new state-of-the-art manufacturing facility  in
Singapore is progressing on  plan, with more than  half of the  tools
now transferred  and  in full  production  at the  new  site.  Strong
customer demand  to keep the remaining tools in production at the old
site will result in the completion of the move by early Q4'2008  only
three months later than originally envisaged one year ago.


Dr Drew Nelson, IQE's Chief Executive, said:

"The rapidly  growing demand  for our  products is  being fuelled  in
part   by  a   number  of   significant  factors   in  the   wireless
communications marketplace.  Firstly, the  advanced features,  higher
performance and low power consumptions that are enabled by the use of
gallium arsenide  mean that the volume of our products being used  in
handsets and other wireless  devices is growing substantially  faster
than the overall  handset market.  Secondly, the  growth in  wireless
communications in emerging markets  is driving additional demand  for
feature rich handsets  with advanced features  and efficiencies  made
possible  by  our  products.   Thirdly,  competing  technologies  and
protocols are being consolidated within hardware by building multiple
components in handsets  to enable greater  compatibility between  new
and emerging wireless standards.

"Together, these factors contribute to a substantially growing demand
for gallium arsenide based components,  and we have seen no  evidence
of any let-up  in the demand  from any  of our key  customers in  the
wireless marketplace.

"In addition we have a range of new technologies we are currently  in
the process of bringing to  market, including highly efficient  solar
cells,  ultra  high  brightness  LEDs  for  lighting,  and   advanced
microprocessor and memory products.

"The Board is confident that the continuing bouyant market conditions
and our  robust strategy  will ensure  that we  remain on  course  to
deliver strong growth in revenues and profits for the full year."





Contacts:

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

College Hill ([phone])
Adrian Duffield
Kate Norton

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

Panmure Gordon (UK) Limited ([phone])
Aubrey Powell
Ashton Clanfield


NOTE TO EDITORS
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, high efficiency LEDs and a variety of advanced silicon based
systems.

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.

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