IQE and QinetiQ sign Heads of Agreement for Joint Venture in advanced semiconductor materials

Cardiff, UK. Cardiff based manufacturer of advanced semiconductor materials, IQE plc (IQE) has today signed a Heads of Agreement with QinetiQ (formerly the bulk of DERA : The Defence Evaluation and Research Agency) to form a Joint Venture company to undertake research and development contracts and provide materials assessment services on behalf of IQE, QinetiQ and their customers globally.

Advanced semiconductor materials using alloys of indium, gallium, arsenic, phosphorous, nitrogen, antimony, silicon, germanium and carbon have made a major impact on electronic and optical devices and systems over the last few years and the manufacture of fully characterised epitaxial structures is a critical step in the supply chain.

As we look towards the next generations of technology based applications, the impact of components based upon these materials will grow increasingly more important. Key attributes of these "compound semiconductors" include high speed / high frequency switching, ultra low power consumption and a range of vitally important optical properties from the visible through to the infrared part of the spectrum, which have been the key enabling technology behind the telecommunications infrastructure as well as data storage, automotive, lighting and medical technologies.

The operation of the Joint Venture will be based on epitaxial growth technology with eight tools dedicated to III-V materials and a further two dedicated to complex silicon based epitaxy including SiGe and SiC products. Both companies will input expertise and equipment and the Joint Venture s services will be marketed through IQE s existing world-wide sales and marketing operations.

The IQE/QinetiQ Joint Venture will initially operate from the existing QinetiQ facility at Malvern, UK, although it is planned to have a separate facility fully operational within the next three years. The new facility will also be based in Malvern, UK.

Steve Byars, Managing Director of IQE (Europe) Ltd said "This Joint Venture consolidates both IQE s and QinetiQ s positions within the industry and allows IQE to focus on volume production whilst offering customers access to a truly world-class materials research and development centre"

Derek Barnes, QinetiQ s Director of Sensors & Electronics said "This Joint Venture with IQE is exemplary of QinetiQ s business strategy to partner with industry leaders who can boast a strong track record and an excellent pedigree. QinetiQ will ensure that it continues to enjoy significant organic growth through the exploitation of our technologies in the commercial sector"

Notes for Editors:

IQE plc (LSE: IQE.L, NASDAQ EUROPE: IQEP) is the leading global outsource supplier of advanced epi-wafers to the Semiconductor Industry with manufacturing operations in Cardiff and Milton Keynes, UK and Bethlehem, PA, USA. Its wafer products are used by a diverse range of customers worldwide to manufacture the critical, advanced components used in fibre optic communications systems, wireless and mobile telephony applications, optical storage devices such as CD, DVD, Minidisc and a range of other leading edge technologies including High Brightness LED displays, medical devices, satellite systems and automotive applications. The group has expanded to over 450 people worldwide.

QinetiQ, formerly the larger part of DERA (Defence Evaluation and Research Agency) incorporates the bulk of the MOD s non-nuclear research, technology and test and evaluation establishments in its heritage. QinetiQ is one of Europe s largest research organisations and among its 8,500 staff it employs many leading scientists and internationally acclaimed experts.

In July 2000 the UK Government agreed to a programme that would see the bulk of DERA being set up as a Public Private Partnership (PPP). In July 2001, three-quarters of the agency became a wholly government owned plc called QinetiQ (pronounced ki ne tik as in kinetic energy ). This is a precursor to eventual flotation, now likely in early 2002. A quarter of the Agency was retained within the MOD as DSTL (the Defence Science and Technology Laboratory).

QinetiQ has an incomparable track record in the fields of microelectronics and optics and has received 13 Queen s Awards since 1979 for its pioneering research and development in areas including the invention of liquid-crystal displays (LCDs), infra-red sensors and microwave radar. With many years experience in the processing, preparation and characterisation of semiconductor materials (including III-V and Si(Ge) based materials), QinetiQ has combined and inherited the technology and the expertise from government defence research sites throughout the UK.

Contacts:

IQE: Steve Byars on 02920 839 400, email sbyars@iqep.com or visit our website at www.iqep.com

QinetiQ: Andrew Johnson on 01684 894588, email adjohnson@QinetiQ.com or visit our new website at www.QinetiQ.com