IQE rockets after securing new manufacturing plant in US

IQE, the Cardiff-based supplier of semiconductor wafers, has agreed to takeover the in-house manufacturing facilities of American firm RF Micro Devices (RFMD).

The deal produced a big boost in IQE's share price on Wednesday; by 08:42 the stock had risen 15.8%.

In essence, IQE will receive, but not pay for, a 150,000-square foot facility in North Carolina which is already set up to make the wafers which are used in things like smartphones and sat-nav equipment.

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In return, IQE will provide discounts on contracts for RFMD, which needs the wafers for the microchips it manufacturers. It's easier for RFMD to outsource the manufacturing than do it in-house because the unit costs come down and the speed of delivery increases.

Dr Drew Nelson, the President and Chief Executive of IQE said of the deal: "This landmark agreement with RFMD, one of the true global leaders in the wireless semiconductor industry, provides us with a significant step up in our manufacturing capacity, bringing substantial financial and scale benefits to the group. This is a clear win-win for both organisations."

BS