Scotland's Flagship Opto-Electronics Company Attracts $5 Million Venture Capital Investment Package

Glasgow, UK. Compound Semiconductor Technologies Ltd. (CST), the Glasgow based III-V opto-electronic foundry and technology transfer company, has today, secured venture capital investment by an investor consortium led by EDP (European Digital Partners) in a second round of funding. The $5 million investment package also included investment from Intel Capital. Further financial details were not disclosed.

The investment will help enable CST to strengthen its manufacturing capability and foundry services, to produce volume products for optical systems companies.

EDP led the equity fundraising round, with syndicate members including a series of well-known private investors within the opto-electronic market. The new investors in the equity fundraising round will join the group of existing members in CST, the University of Strathclyde, the University of Glasgow, Scottish Enterprise and Scottish Enterprise Glasgow.

Neil Martin, CST s Chief Executive, said, "We are delighted to attract funding from some of the most influential players in the industry. This investment gives CST not only the financial injection - but also the industry experience of key players in the opto-electronics sector. It gives CST the ability to help expand its foundry manufacturing capability and service an increasing volume of start-ups whilst building on its position across a global customer base, where today approximately 60% of our revenue is generated overseas."

Robert Crawford, Scottish Enterprise s Chief Executive commenting on the funding said, "I think the importance of this announcement cannot be underestimated for Scotland s reputation as a global player in the opto-electronics arena. Scotland is becoming renowned for its crucial knowledge base, innovation and expertise within this industry sector. We at Scottish Enterprise wish continued success to CST and current and potential future start-up companies associated with it."

Mr Erik Fallstrom, Managing Director of EDP commenting on the investment package said, "Having closely watched CST and its success in the market place, we feel this is a natural fit within our investment portfolio. The unique make-up of CST positions it to become a globally significant company. This partnership offers a great opportunity in the global opto-electronics market."

Mr Brian Aitken, Assistant Director at PricewaterhouseCoopers who acted as lead advisers on the investment deal said, "CST has done extremely well in securing funding in such a tough market place. This investment will help further to consolidate Scotland s position as a leading player in the global opto-electronics industry."

About Compound Semiconductor Technologies Ltd. Compound Semiconductor Technologies Ltd. is a compound semiconductor foundry offering wafer growth (MBE and MOCVD), wafer processing and device fabrication with a particular focus on GaAs and InP device structures. CST offers foundry services to established companies and new ventures enabling significant reductions in development costs, risk factors and time to market. In addition, CST has access to GaN wafer growth facilities. Compound Semiconductor Technologies Ltd. was formed in 1998, as a joint project between Scottish Enterprise, Scottish Enterprise Glasgow, the University of Glasgow and the University of Strathclyde and part-financed by the European Union, European Regional Development fund, Western Scotland Objective 2 Program, Program 1997-1999 Program, to develop leading edge technologies and services, to provide facilities for and to commercialize University research and create and/or support new companies in the expanding field of compound semiconductors. CST mainly operates out of its research centre, cleanrooms and manufacturing facility, located in the West of Scotland Science Park, Glasgow. Since it s formation, CST has attracted world-wide attention for its unique track record in providing incubation facilities for new start-up companies such as Intense Photonics and Kamelian who develop components for the fiber optic telecommunications industry. CST also provides optical foundry manufacturing facilities for established US and UK companies. Contact: Neil Martin + 44 (0) 141 579 3000; n.martin@compoundsemi.co.uk

About European Digital Partners Formed in early 2000 by the principals of Arkwright Capital Partners and the executives of KKR, European Digital Partners specialises in equity investments in private technology growth companies. EDP s investment philosophy is based on intensive, fundamental research and experiences in the fields of the networking and communication industries. Contact: Erik Fallstrom + 44 (0) 20 7973 5862; erik.fallstrom@edcapital.com

About Intel Capital Intel Capital, Intel s strategic investment program, focuses on making equity investments and acquisitions to grow the Internet economy, including Internet infrastructure, content ands services in support of Intel s strategic interests. For more information, visit www.intel.com/capital

About Scottish Enterprise Rated among the world s top economic development agencies, Scottish Enterprise is the main economic development agency for Scotland covering 93% of the population from Grampian to the Borders. The Scottish Enterprise Network consists of Scottish Enterprise and 12 Local Enterprise Companies. Working in partnership with the private and public sectors, its aim is to secure the long-term future of the Scottish economy by making our industries more competitive. Funded by the Scottish Executive, SE is headquartered in Glasgow.

About The University of Glasgow s Research & Enterprise Department Research & Enterprise (R&E) is the research, development and commercialization arm of The University of Glasgow. R&E is the entry point for industry, facilitating access to the University s world-class researchers, services and technologies, and offering a range of commercial opportunities arising from its research activities. R&E also provides help and advice to University of Glasgow researchers wishing to take maximum advantage of the funding opportunities or to commercialize the output from their research.

About The University of Strathclyde s Institute of Photonics and Research & Consultancy Department The Institute of Photonics, University of Strathclyde, bridges the gap between academic research and industrial application and development in the area of photonics, through excellence in commercially relevant research and exploitation. Its activities encompass strategic long-term research, often undertaken through university : industry collaboration; industrial contracts; consultancy; and commercialization. The Institute has worked closely with CST since CST s establishment, and co-locates one of its research activities - in gallium nitride materials growth - within the CST facility. The Institute is supported in its commercialization activities by Research & Consultancy (RCS). Established in 1984, RCS handles all aspects of technology innovation, technology transfer and project administration arising from the University s research programs.