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Anadigics Terminates Chinese Fab Plan

The power amplifier manufacturer continues to trim jobs and looks to outsourcing, with foundry partners due to be qualified later in 2009.

The remodeled leadership at GaAs chipmaker Anadigics has discarded its existing plans for capacity expansion in China in favor of a hybrid manufacturing model.

During the final quarter of 2008 the company paid off its $13 million obligation for the Kunshan, China, fab that it originally announced plans for in April 2007.

“We believe we have much better plans now," Anadigics chairman Gilles Delfassy told analysts when discussing the company's financial results on February 27.

“The most effective and efficient way to augment our existing capacity is actually with foundry suppliers."

Both Delfassy and fledgling chief executive officer Mario Rivas have lengthy experience with companies splitting output between their own fabs and foundries in hybrid models.

Anadigics is now qualifying foundry partners, and expects to receive revenue from products they make in the second half of 2009.

The outsourcing moves come as Anadigics explores ways to further limit salary expenses with its revenues sliding from a peak of $80 million in June 2008.

December s quarterly sales of $45.2 million were down 22 percent sequentially, and are set to fall another 35 percent in the current period.

After making around 100 employees redundant at a cost of $2.1 million in the December quarter Anadigics predicts another $1 million of voluntary redundancies and retirements in this period. Other measures include instigating periods of mandatory leave for all US employees.

The company s overall $36.4 million quarterly loss was compounded by expenses related to these cost-cutting steps and other recession-related charges.

Management explained that since June cellphone manufacturers have replaced some of Anadigics products with those of its rivals.

This comes as a consequence of Anadigics difficulties meeting their demands in that quarter, a situation that led to former CEO Bami Bastani s resignation. Delfassy then temporarily took over, before the appointment of Rivas on Feburary 1.

However Anadigics power amplifiers do feature in the popular Blackberry Bold and Storm models, and the company claims to have a strong presence in touch screen phones.

Delfassy says that Anadigics is also now winning deals for inclusion in upcoming handsets with customers like LG and Samsung, although macroeconomic issues could affect the success of these models.

“We have restored confidence that we are able to be a great partner for them," the chairman said. “The fact that we are winning designs in their new platforms that will ramp later this year is a very encouraging sign."

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