IQE plc, the leading global supplier of advanced wafer products and wafer services to the semiconductor industry, is to acquire UK based NanoGaN Limited (“NanoGaN”).

NanoGaN has established a range of unique processes and key intellectual property relating to gallium nitride (GaN) materials and devices. This includes its proprietary Nanocolumn Technology for producing high quality, free-standing gallium nitride substrates, which are critical for manufacturing high quality blue and green semiconductor lasers and ultra high brightness LEDs for Solid State Lighting (SSL).

The development of NanoGaN’s proprietary technology is at an advanced stage. IQE will assist in completing the development of commercial products and will thereafter begin the transfer of the technology to its high volume production facilities where it is expected to begin generating sales in 2010, followed by rapid sales growth as the technology is commercialised.

The acquisition complements and enhances IQE’s existing product portfolio by accelerating the Group’s strategic plans to develop a leadership position in the emerging high growth markets for advanced laser projection, high definition optical storage (including Blue Ray products), high resolution laser printing and solid state lighting for industrial, commercial and residential lighting. NanoGaN’s core technology will also be used to further enhance IQE’s leading position in the supply of GaN products for high power RF applications.

The deal also strengthens IQE’s position as a technology leader by bringing powerful new intellectual property to the group, and exciting new talent. NanoGaN brings with it seven filed patents, and several additional innovations for which patents will be submitted.

As part of the deal, Professor Wang, the CEO of NanoGaN and inventor of the nanocolumn technology will become Chief Scientific Advisor to IQE. Professor Wang is widely acknowledged as a world leading advanced materials scientist with significant commercial and advisory experience. He was co-founder of Arima Optoelectronics Corporation, a leading optoelectronics company listed on the Taiwan Stock Exchange. Professor Wang has a history of successfully patenting innovative technologies. Many of his 26 granted patents continue to be used for mass production within the optoelectronics industry. He has also acted in advisory roles, including Scientific Advisor to the ITRI (Industrial Technology Research Institute) of Taiwan and to the Taiwanese Government.

The consideration for the acquisition of NanoGaN is for up to £3.6m, based on the achievement of milestones relating to the commercialisation of the intellectual property. The initial consideration of £0.4m will be settled by the issue of new shares and cash. IQE has the option to settle the future milestone payments in either shares or cash.

Completion of the acquisition will take place upon admission to trading of those new shares to be issued in satisfaction of part of the initial consideration, expected to be on or around 7 October 2009.