This new Catapult will build on existing investment by Cardiff University, IQE, and Welsh Government.
Economy Secretary Ken Skates said: It is hugely encouraging that Welsh Governments initial 12m investment in developing the cluster back in 2015 has been the catalyst for todays announcement that IQE plans to expand into the City Deals new facilities.
Dr Drew Nelson, Chief Executive of IQE plc said: Compound semiconductors are rapidly defining 21 century technologies and Wales is uniquely positioned to be centre stage of this global, high-tech industry sector.
The facility will become the base for a number of compound semiconductor related activities, including IQE, where we expect to rapidly expand our production capacity to meet increasing demand for our technology.
IQE said the majority of its technologies and supply chains will not be hurt by the ban but it still "believes it may experience some delay to orders" and could need see adjustments to supplier managed industry levels, largely within its Wireless Business unit.
In total, IQE expects 9% revenue growth at constant currency in 2019 and an adjusted operating margin of more than 10% of revenue.
IQE Chief Executive Drew Nelson said: "The recent ban on sales of products from US companies to Huawei and its affiliates is a factor completely outside of IQE's control.