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21 August 2006


IQE closes acquisition of EMD after raising £12m

Epiwafer foundry IQE, which has manufacturing facilities in Cardiff and Milton Keynes, UK and in Bethlehem, PA, USA, has completed its acquisition of component and subsystem maker Emcore Corporation Inc's Electronic Materials Division (EMD), one of the top five third-party epiwafer foundries, for $16m (an initial payment of $13m, plus $3m payable in four equal quarterly payments subject to 7.5% interest per annum).  For its financial year to end-September 2005, EMD's revenue was $12.2m and the value of its assets was $9.0m. The business has continued to grow strongly in the current financial year.

To finance the acquisition and working capital, at an Extraordinary General Meeting on 15 August shareholders approved the issuance of 87.5m new ordinary IQE shares at 13.75p per share (raising about £12m) in a placement
by Noble & Company Ltd on the London Stock Exchange's AIM market (trading from 16 August).

IQE says that EMD has pursued a similar strategy to that of IQE, in building a strong outsource foundry model for the supply of epiwafers. EMD provides foundry production of electronic epitaxial materials, with a focus on the wireless markets, and has concentrated on HBT-based technologies for power amplifier applications, as well as integrated BiFET and GaN structures. Consequently, it supplies a range of highly complementary products to a range of customers different to that of IQE's own customer base.

IQE claims that the acquisition has created "the leading global outsource supplier of current and next-generation products into the wireless marketplace, including pHEMT, HBT, integrated BiFET and advanced GaN technologies". It also provides "significant opportunities to accelerate
sales into existing and new customers".

The acquisition represents a key step forward in IQE's development as the leading outsource wafer supplier worldwide, says Dr Drew Nelson, IQE plc's president and CEO. "The joining of the two companies allows IQE to offer a truly one-stop wafer outsource service," he adds.

IQE's directors believe this creates a significant opportunity to grow revenues within existing IQE and EMD customers by offering all major technology platforms to the enlarged customer base, from the "largest, state-of-the-art production capacity in the industry".

All of EMD's staff of about 50, including its management team, have been offered employment with IQE. The IQE board intends that EMD, which has 10 TurboDisc epitaxial tools, will continue to be run as a stand-alone entity
in Somerset, NJ, USA. "This transaction assures EMD's current customers that, as part of a larger wafer outsource group, all the necessary resources are in place to fully support the joint customer base as their wafer demands
continue to grow," adds Nelson.

See related items:

Emcore reduces losses as a result of ongoing consolidation

Analysts back IQE's acquisition strategy

IQE acquiring Emcore's epi division for RF

Visit: http://www.iqep.com