Pre-close Update

RNS Number:3508U
IQE PLC
19 January 2004


                                                                 19 January 2004


                                    IQE plc
                            Pre-close trading update


IQE plc, a leading global outsource manufacturer of advanced semiconductor
wafers, is pleased to provide an update on trading following its successful
placing and open offer in November 2003.

Drew Nelson, Chief Executive, commented; "Although trading in Q4 remained
difficult and revenue will be adversely affected by the significant weakness of
the dollar, the Group has been successful in continuing to develop new business
opportunities which should impact favourably during 2004."

IQE Europe

The first production quantities of optoelectronic wafers for a major Far East CD
manufacturer, following successful qualification, are now being shipped.
Shipments of  DVD laser wafers to two other major OEM suppliers has also
continued and further qualifications relating to these products are in progress.
IQE Europe has successfully qualified its high power laser wafer products with
one of the largest industrial laser manufacturers and qualifications with other
manufacturers serving this segment are also underway.  Opportunities for other
opto products in VCSELs (short distance communications), sensing and imaging,
LEDs and optical communications continue to build.

IQE Silicon

The first results from IC circuit performance on IQE Strained Silicon Wafers
processed through a leading edge chip manufacturer are expected by the end of
March 2004.  Two other major IC chip houses have recently committed to process
IQE Strained Silicon through their most advanced chip processes, bringing the
total number of manufacturers evaluating IQE's generic product, to four.  In
addition, one of these key players has committed to two new programmes involving
variants of Strained Silicon processes with IQE.

IQE Inc

Despite some recent softness in the wireless sector, one of IQE's key customers
has just won a major contract and as a result is forecasting to substantially
increase its requirement for wafers from Q1 2004 onwards.  Another customer has
recently reported an upturn in business. However, the continued weakening of the
US dollar impacts adversely on sales by IQE Inc, although this is offset
somewhat by a favourable impact on raw material prices.  The variability of
orders in this business as customers win or lose significant contracts from the
major mobile phone manufacturers, continues to make short term forecasting
difficult which in turn can impact on reactor planning and hence utilisation and
yields. Progress continues to be made in addressing major outsource contracts
from current in-house manufacturers serving the wireless sector.

Wafer Technology

At our substrate business, two major customers have substantially increased
their GaAs wafer demand for Q1 2004 and good progress is being made on several
important qualification programmes. As a result, visibility in this area is
beginning to improve.

The overriding objective for IQE Group is to achieve cash flow breakeven, which
is expected by the end of 2004, and to position itself for growth in future
years.  With a recovery in many of the sectors served by the Group, we are
taking action to  strengthen our sales resource with particular emphasis on the
Asia Pacific Region.   In light of aggressive price competition throughout our
industry, the Group continues to exercise tight controls over the cost base.

For further information, please contact:

IQE plc:
Dr Drew Nelson/Stuart Hall/Chris Meadows                   Tel: [phone]

Evolution Beeson Gregory:
Tim Worlledge/Matt Wood                                    Tel: [phone]

Buchanan Communications:
Tim Thompson/Nicola Cronk                                  Tel: [phone]


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