Client & Alumni News

High-Tech Venture, IQE, Inc., Succeeds with High-Level Support

The real estate adage “Location, location, location” has a cousin in the semiconductor industry: “Faster, faster, faster.”

IQE, Inc.

IQE technology is used in semiconductors for mobile telephones, missile guidance systems, satellite communications, power systems, automotive applications, and more.

The inexorable desire for speed—not to mention size reduction, reliability, cost, and design flexibility—had led to new materials and processes, including sophisticated molecular beam epitaxy, MBE.

In 1989, Tom Hierl and his start-up company, Quantum Epitaxial Designs, Inc. (QED), saw an opportunity for producing MBE wafers on an outsourced basis. Between him and success were costly validation research, million-dollar equipment, and exacting facility requirements on top of the extraordinary rigors of launching a business. Scale-up continued into 1996.

Two years later, QED was one of the fastest-growing companies in Eastern Pennsylvania. And in 1999, Hierl’s company merged with Epitaxial Products International, Ltd. (EPI) in Cardiff, Wales, to form International Quantum Epitaxy, or IQE. Evidently, “faster, faster, faster” applies to the business as well as the products.

No Wavering on Wafer Advancements

MBE is a wafer production method that uses a molecular beam of materials to deposit atom-thin layers onto advanced, multi-element substrates like gallium arsenide. The resulting semiconductors are used in mobile telephones, missile guidance systems, satellite communications, power systems, automotive applications, and more.

Complicated processes like MBE demand expensive state-of-the-art equipment, extremely pure material sources, and an ultra-high vacuum environment. The Ben Franklin Technology Partners of Northeastern Pennsylvania helped deliver the capital funding to start QED’s operation.

Ben Franklin made the introduction to the bank for us. The staff hooked us up with Mid-Atlantic Venture Partners for venture financing. They found us capital.

“And when there were questions along the way, Ben Franklin was always there as a resource for guidance,” says Hierl.

Business Operations Get a Boost

In addition to funding assistance, Ben Franklin provided space and resources to the new company in the nationally recognized Ben Franklin Business Incubator.

“Just being in the incubator center was a big advantage. You come in as a freshman and you talk with the juniors and seniors about things needed to run a business, like medical insurance and phone systems,” says Hierl. “Eventually, you become a senior and graduate. It’s helpful to be around others going through the same issues.

“Plus, being able to have cleanroom facilities at the incubator was very important. A commercial landlord would want a guarantee for lease improvements, so that was a big step that we didn’t need to worry about,” he said.

Weathering the Market’s Boom-Bust Cycle

IQE offers outsourced production of high-quality wafers to some of the biggest names in the electronics industry – companies that wanted to benefit from the firm’s expertise and unique manufacturing capacity.

During the telecommunications boom in the late 1990s, IQE’s sales rose dramatically as its customers rushed to meet consumer demand. When demand dipped, the company had a financial footing solid enough to survive. “We had a good amount of critical mass, so when the market did a downturn, we were able to weather it, as opposed to being debt financed and having cash flow issues,” says Hierl.

Over the past two years, IQE’s Bethlehem business has grown its domestic business more than 300%. IQE is the largest independent epi-wafer producer in the world, and now with nearly 90 employees and a 50,000-square-foot facility in Bethlehem, the company is looking to expand its presence overseas. “We’ve been making inroads into the Far East and are starting to see good results in Japan and Taiwan. We’re also looking to get into China and South Korea,” says Steve Gergar, who manages IQE’s Bethlehem operations since Hierl left the company in 2003. “It’s very tough to break into the market. But once you do, you have a big foot in the door and it really opens up new opportunities.”

IQE, Inc.
Bethlehem, PA

Product/Service: Molecular beam epitaxy (MBE) epiwafers for telecommunications, optoelectronics, and electronic applications

Ben Franklin Involvement:

  • Investments totaling $231,000
  • Third party funding assistance
  • Ben Franklin Business Incubator tenant
  • Strategic planning and advice