Boston, MA - July 27, 2006 -- According to the experts at Strategy Analytics, IQE's successful acquisition of Emcore's epitaxial substrate business will increase IQE's share of the commercial epitaxial substrate market, giving IQE the necessary tools to generate net profits by the end of 2007.

Strategy Analytics forecasts that overall demand for epitaxial substrates will grow 40 percent year-on-year in 2006 and 30 percent year-on-year in 2007. However, commercial demand for MBE substrates is restricted by captive capabilities and regional preferences for MOCVD. By acquiring Emcore's Electronic Materials Division (EMD), IQE can offer GaAs device manufacturers a one-stop shop for both MOCVD (metalorganic chemical vapor deposition) and MBE (molecular beam epitaxy) material.

"Overall, we believe this is a positive move for IQE that will enable the company to increase its share of the commercial SI GaAs epitaxial substrate market and move into profitability," says Asif Anwar, Director of the Strategy Analytics GaAs and Compound Semiconductor Technologies service. "We recommend that IQE shareholders pass the resolution approving the placement of IQE shares to raise capital for the EMD acquisition."

"This is a very positive move by IQE," notes Stephen Entwistle, Vice President of the Strategic Technologies Practice at Strategy Analytics. "However, IQE will still need to overcome several commercial challenges to achieve its target of becoming the world's leading commercial supplier of SI GaAs epitaxial substrates."

Further analysis of the SI GaAs epitaxial substrates market will be available to clients of the GaAs and Compound Semiconductor Technologies service in the forthcoming report, "Markets for SI GaAs Epitaxial Substrates 2005-2010," and at this time in "IQE's Emcore Acquisition can create a One-Stop Shop for Epitaxial Substrates but can they make a Profit?"