Trading Statement

IQE PLC
03 February 2003



IMMEDIATE RELEASE                                             3 February 2003


                                    IQE plc



                 Further Job Cuts and Asset Impairment Charges



IQE plc, the leading provider of advanced customised wafers to the Semiconductor
Industry, reports that due to the continuing difficult trading conditions in the
global semiconductor industry it has decided to implement a further redundancy
programme and to take further impairment charges on its assets.



Sales revenues for Q4 2002 are likely to be approximately 5% below the £5.6
million reported in the previous quarter, largely as a result of the adverse
movement in the dollar sterling exchange rate, since the majority of IQE sales
are dollar denominated.

In addition, IQE (Europe) has been particularly badly hit as the fibre optic
components market continues to decline as R&D budgets come under even more
severe pressure, despite continued strengthening in demand for wireless related
products at IQE (Inc) and improving outlooks at both the IQE Silicon Compounds
and Wafer Technology divisions.



IQE (Europe) has been diversifying away from its traditional reliance on the
fibre communications business, and this, together with improved trading in other
divisions, means overall wafer volumes for the Group are expected to improve
throughout 2003.  Despite these increased wafer shipments, however, revenues for
the Group for 2003 are expected to remain relatively flat as a consequence of
the continuing weakness in the dollar sterling exchange rate and strong industry
price reductions. First quarter revenues will be affected by the usual seasonal
weakness in demand.



The redundancy programme will result in a further 60 job cuts, of which the
majority will be at IQE (Europe), but savings will also be made elsewhere within
the Group.  Overall, these and other measures are expected to generate savings
of a further £2 million per annum. Exceptional costs associated with these cuts
of approximately £500,000 will be taken in the Q1 2003 accounts. At 31 December
2002, the Group had gross cash of approximately £17.4 million .



As a result of continued underutilisation of the Group's asset base, the Board
has decided to take an asset impairment charge in the Group's 2002 accounts of
approximately 80% of the current net book value of the Group's assets.  This
will be a non-cash charge and will be quantified in detail in the Group's
preliminary 2002 full year accounts announcement, currently scheduled for 26th
March 2003.



Commenting Dr Drew Nelson, CEO said, 'Although we are now seeing improved
trading in three of our four divisions, continuing declines in the fibre optic
market and industry uncertainty on the timing and strength of a convincing
upturn in the overall economic climate, means that we must continue to bear down
on our cost base to ensure our cash position remains strong. We are convinced
that our outsourcing model is continuing to strengthen as customers rebuild
their own balance sheets, customer capex is reduced and companies strive for
more flexible business models to address increased uncertainty and cyclicality
within the semiconductor industry'



For further information please contact:

Drew Nelson, President and CEO, IQE plc                          [phone]
Tim Hawkes, CFO, IQE plc                                         [phone]
Tim Thompson/Nicky Cronk, Buchanan Communications                [phone]




                      This information is provided by RNS
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