Substrate supply contract

IQE PLC
18 December 2007

18 December 2007



IQE plc



IQE signs substrate supply contract with AXT for 2008



Cardiff, UK - IQE plc (AIM: IQE, 'The Group') the leading supplier of advanced
wafer products and services to the global semiconductor industry, has today
announced the signing of a substrate supply agreement with AXT, Inc. (NasdaqGM:
AXTI), a leading manufacturer of compound semiconductor substrates.  The
agreement is valued at approximately $15.1 million, with an option to purchase
an additional $3.5 million of substrates.  All substrates ordered under this
contract are to be shipped by the end of 2008.  The substrates ordered by IQE
are all 4-inch and 6-inch semi-insulating GaAs, principally for use in global
wireless applications.



Drew Nelson, Chief Executive of IQE, commented:



'As one of IQE's key suppliers, AXT is well positioned to be able to accommodate
our increasing demand, particularly in larger diameter gallium arsenide
substrates for the rapidly growing wireless applications industry.  Its
expansive manufacturing capacity, unique raw material capability and broad
product portfolio make it an excellent choice as one of our key partners to
support our strong growth plans for 2008.'



Contacts:


IQE plc : www.iqep.com

Drew Nelson                                               [phone]
Phil Rasmussen
Chris Meadows


College Hill:
Adrian Duffield / Ben Way                                 [phone]


Noble and Company :
John Llewellyn-Lloyd/ Sam Reynolds                       + 44 (0) 20 7763 2200





About IQE plc



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 customized 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 centers worldwide.



About AXT, Inc.



AXT designs, develops, manufactures and distributes high-performance compound
and single element semiconductor substrates comprising gallium arsenide (GaAs),
indium phosphide (InP) and germanium (Ge) through its manufacturing facilities
in Beijing, China.  In addition, AXT maintains its sales, administration and
customer service functions at its headquarters in Fremont, California.  The
company's substrate products are used primarily in lighting display
applications, wireless communications, and fiber optic communications. Its
vertical gradient freeze (VGF) technique for manufacturing semiconductor
substrates provides significant benefits over other methods and enabled AXT to
become a leading manufacturer of such substrates, particularly in
optoelectronics applications. AXT has manufacturing facilities in China and
invests in five joint ventures producing raw materials. For more information,
see AXT's website at http://www.axt.com.





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