Launch of New Subsidiary

IQE PLC
22 November 2000


                         IQE plc

     IQE ANNOUNCE THE FORMATION OF IQE SILICON COMPOUNDS

IQE  plc,  the  leading outsource supplier  of  epitaxial
wafers to the Compound Semiconductor Industry, is pleased
to  announce today the formation and launch  of  a  newly
created  Subsidiary of IQE plc to be  named  IQE  Silicon
Compounds Ltd.

IQE  Silicon Compounds will be Europe's first independent
provider of outsourced epitaxial services to the  Silicon
based  Semiconductor Industry with a  range  of  customer
services from a new facility in Cardiff, Wales, UK.  This
operation will be highly complimentary to IQE's  existing
compound  semiconductor epi wafer products  and  services
business  based on III-V compound substrates,  since  the
range of epi services now required for the communications
industries is growing rapidly. In particular,  newer  and
more  sophisticated  products  built  on  silicon  wafers
increasingly  require complex epitaxial processes  and  a
number  of  new materials such as SiGe are  finding  wide
spread  application, particularly in the fibre optic  and
wireless communication industries.

The  new  Company  will supply a flexible,  confidential,
secure outsource service commencing in Q1 2001.  Services
will  include selective and buried layer Si  epitaxy  for
BiCMOS  and  Bipolar process; Silicon  Germanium  (SiGe),
SiGe   selective  growth  and  other  epi  services   for
predominantly the fibre optic and wireless communications
industries.  All  wafers  will  be  supplied  with   full
performance and characterisation data and wafer sizes  of
100mm, 150mm and 200 mm diameters will be catered for.

The  first major customer for the new company is  Bookham
Technologies  plc,  who are the leading  manufacturer  of
optical  components  and circuits  based  on  Si  wafers.
However, there has been exceptional interest shown in the
services to be offered by the new Company, by many  other
major European industry players.

IQE  Silicon  Compounds will operate from a new  facility
currently  under  construction  in  Cardiff,   in   close
proximity to IQE's existing operations. Funding  for  the
operation is predominantly by way of lease finance, aided
by   a  substantial  development  grant  from  the  Welsh
Assembly   under   Regional   Selective   Assistance   of
£1.7million.

Consequently  the  new Company will  not  be  reliant  on
finance  raised earlier this year by IQE, which has  been
earmarked   for   growth   of   its   existing   Compound
Semiconductor   business  and  for  Joint   Venture   and
Acquisition activity.

Although  the  new  company will leverage  strongly  from
IQE's existing World leading expertise in epitaxy, a  new
team  of  experts  from the Silicon  Industry  have  been
assembled,  allowing  the  new company  to  grow  rapidly
without   dilution  of  management  resources  of   IQE's
existing business.

It  is  anticipated that operations will commence  in  Q1
2001 and that the new Company will be close to break even
by  2002.  It  is expected that over 100 high  technology
jobs will be created over the next four years.

Dr  Drew Nelson commented 'This development marks another
major step in establishing IQE as the leading provider of
epi  services  worldwide, with a comprehensive  range  of
products closely aligned to our customers needs.  As  the
materials requirements become even more sophisticated  to
enable faster, more efficient circuits and components  to
be  built, epitaxy is becoming ever more important  as  a
critical step in the manufacturing chain.  Our goal is to
provide  the  highest quality outsource  epitaxial  wafer
services  across the range of materials demanded  by  the
customer base.'

IQE  plc  is  the leading outsource provider of  compound
semiconductor  epi wafers with production sites  in  both
the  UK  and USA. Its products and services are  used  by
many   major  industry  players  in  the  optical   fibre
communications, wireless communications, optical  storage
and consumer products industries.



For further information contact :

IQE plc
Drew Nelson                   Tel :[phone]
Buchanan Communications
Tim Thompson / Nicola Cronk   Tel :[phone]
Silicon
Alistair Hoy                  Tel :[phone]