Contract Win

27 Jan 2006 07:01

IQE PLC27 January 2006 For Immediate Release 27th January 2006 IQE plc IQE wins a further significant 5 year full outsource contract IQE plc ("IQE" or "the Group")), a leading global outsource supplier ofcustomised wafers to the semiconductor industry, is pleased to announce afurther significant full outsource contract win. Following an extensive period of evaluation, qualification and productiontesting, IQE Silicon, one of the four subsidiary company's of IQE plc, hassigned a five year outsource contract with a major US based chip manufacturer.Under the terms of the agreement, IQE will become solely responsible for all ofthe production, development and logistics of the customer's epi based products.The contract will be effective as of 1st January 2006, and is expected to beworth at least $2 million to the Group during the current financial year.Subsequently, this is expected to grow significantly as a larger percentage ofthe customer's products become epi based from the current non epi basedtechnology. Overall therefore the contract is likely to be worth in excess of$10 million in revenues to IQE over the term of the contract. IQE won the contract as a result of its first class production performance,demonstrating outstanding quality of product and cycle time metrics, two of themost critical performance criteria of the customer. This contract win supports a growing full outsource trend, whereby customer'srecognise the significant benefits accruing by partnering with IQE, for all oftheir epi needs. Production risks are virtually eliminated by IQE's uniqueapproach to providing a full outsource service, tailored precisely to eachcustomers' individual circumstances. Since IQE concentrates all its activitieson its wafer outsourcing strategy, customers benefit significantly from theunrivalled level of technical expertise existing within the Group, the Group'soverall purchasing power, and IQE's customer centric and highly flexibleoutsource service. Existing full outsource contracts are performing extremely well, with customersinvariably benefiting from the technical and commercial benefits of the fulloutsource arrangements. The largest of these contracts, signed over a year ago,is likely to generate revenuew for the Group of some $15 million in 2006, as thecustomer has been able to increase their market share significantly. Others arefinding similar benefits to their ongoing businesses. As a result of a number of such outsource arrangements, IQE is now growingincreasingly confident of its forward visibility, as detailed further in thepre-close trading statement separately announced today. Commenting, Dr Drew Nelson, IQE plc CEO said "This important contract win onceagain clearly demonstrates our customers' confidence in the quality and serviceof the outsource model provided by IQE. As a result of this service they areable to compete extremely effectively in their target markets. As epi basedproduction becomes a dominant part of this new customer's product range, theywill benefit even more significantly in the future, a key consideration in theirdecision to have IQE solely responsible for this critical part of theirprocess." For further information, please contact : IQE plc :Drew Nelson +44 (0)2920-839400Stuart Hall +44 (0)2920-839400Chris Meadows +44 (0)2920-839400 Buchanan Communications :Tim Thompson/Nicola Cronk +44 (0)2074-665000 This information is provided by RNS The company news service from the London Stock Exchange