RF Micro Devices, Inc. Announces Fiscal 2001 Second Quarter and Six-Month Results

Greensboro, NC. RF Micro Devices, Inc. (Nasdaq: RFMD), a leading provider of proprietary radio frequency integrated circuits (RFICs) for wireless communications applications, today reported financial results for its fiscal 2001 second quarter and six months ended September 30, 2000.

Financial Results

Revenues for the quarter were approximately $102.2 million, an increase of 48.3% over revenues of $68.9 million for the corresponding quarter of fiscal 2000 and an increase of 4.1% over the previous quarter s revenues of $98.2 million. The increase in revenues was attributable to demand from the handset industry along with an increase in the demand for the Company s broadband products.

Gross profit for the quarter rose 61.6% to $51.9 million, versus $32.1 million for the corresponding quarter of fiscal 2000, and increased 2.6% sequentially over gross profit of $50.6 million for the quarter ended June 30, 2000. The year-over-year improvement in gross profit was primarily attributable to increased volume and a lower cost structure attributed to output from the Company s wafer fabrication facility (fab). The sequential improvement in gross profit was driven by higher sales volume.

Net income for the quarter was $17.7 million, or $0.10 per diluted share, based on a tax rate of 36%, compared to net income of $12.5 million, or $0.07 per diluted share, for the second quarter of fiscal 2000, based on a 35% tax rate, and net income of $16.2 million, or $0.09 per diluted share, for the first quarter of fiscal 2001, based on a tax rate of 38%. Earnings per share for all periods have been adjusted to reflect a 2-for-1 stock split effective August 8, 2000.

Strategic Highlights

RF Micro Devices made progress during the quarter against several major new initiatives. Among these was the announcement that the Company intends to manufacture Indium Phosphide integrated circuits. The Company believes that this compound semiconductor material can provide performance superior to Gallium Arsenide, yielding ultra-high data rate products for next-generation fiber-optic networks, higher efficiency power amplifiers that are smaller and operate from lower battery voltages for cellular and PCS handsets and very high frequency devices for LMDS and other millimeter-wave applications.

RF Micro Devices also announced the opening of a fifth design center located in Pandrup, Denmark. The Company expects that this design center will enable it to capitalize on new opportunities in the European market, facilitate the recruitment of key design engineers and help the Company bring products to this market faster. The Company opened a major new test facility in September located in Greensboro, North Carolina. The expanded facility will enable RF Micro Devices to increase its current test rate by a factor of five.

The Company also shipped its millionth power amplifier multi-chip module during the second quarter, which is particularly significant because the Company currently anticipates an increasing percentage of its total revenues will be comprised of module sales. Accordingly, the Company is extremely pleased to announce that its CDMA power amplifier module has been fully qualified by QUALCOMM and that volume production shipments have begun. Finally, to strengthen the Company s leadership in advanced semiconductor technologies for communications applications, a new research and development organization has been established to focus on advanced semiconductor process development. This organization will complement the recently announced corporate R&D group that is focusing on circuit and packaging development, as well as on future architectures and standards.

Business Outlook

RF Micro Devices experienced lower than expected order activity in the September quarter, which it anticipates will negatively impact revenues in the December quarter. This level of order activity is believed to be largely the result of three factors.

First, as has been announced by some of the largest handset manufacturers, an overly optimistic forecast earlier in the year for the growth of the market has led to excess inventories of handsets. This has reduced component demand while these inventories are being reduced. Second, introduction delays for some next-generation, highly complex handsets have also delayed component demand. And third, the Company experienced a delay in the introduction of a next-generation product that it believes will begin shipping in high volume in the March 2001 quarter.

As a result of these factors, the Company currently expects revenues for the December quarter to be down sequentially approximately twenty percent, which would result in diluted earnings per share in the range of approximately $0.04 to $0.05.

Looking forward, current customer forecasts indicate a return to sequential revenue and earnings growth in the March and June quarters.

RF Micro Devices expanding production capacity in its first fab is currently expected to be sufficient to address demand through mid-calendar 2001. Because the production schedule in the Company s second fab is programmable, the Company currently plans to ramp its second fab consistent with demand.

Comments From Management

David Norbury, President and Chief Executive Officer, stated, "We are pleased to report sequential revenue and earnings growth for our fiscal 2001 second quarter, due primarily to continued demand for our wireless products, as well as 25% sequential growth in our Broadband product line. During the quarter, we reported a number of strategic initiatives, such as our intention to develop and manufacture integrated circuits utilizing Indium Phosphide process technologies and our plans to leverage our leadership in power amplifiers to incorporate other components within highly integrated solutions for handsets. We also announced our collaboration with Atmel Corporation to provide reference designs based on the IEEE802.11b 11Mbps Wireless LAN standard and our expectation of a low-cost complete transceiver solution for Bluetooth applications.

"Obviously, we are disappointed by order activity in the September quarter and our preliminary outlook for the December quarter. We believe, however, that this is a short-term market correction issue for the Company because of the significant production programs we expect to begin ramping in the March and June quarters. Based on our analysis of industry data, we currently expect the handset market will grow between 35 and 40 percent in calendar 2001, and with proper execution our growth should exceed overall growth in the handset market."

Mr. Norbury concluded, "The Company continues to improve manufacturing efficiencies, establish new customer relationships and introduce new, innovative products, which we believe will enable us to maintain our leadership position and return the Company to strong growth in 2001. Regarding new products, we re pleased that our CDMA power amplifier module was fully qualified by QUALCOMM and volume production shipments have begun. To date, we have shipped more than one million modules to our customers. Additionally, we have reason to expect increased market share for our GSM power amplifiers beginning in the March quarter. In fact, in the coming months, we plan to introduce a number of innovative new products, which, if they are successful, could provide us a significant opportunity to gain additional market share."

RF Micro Devices, Inc., an ISO 9001-certified manufacturer, designs, develops, manufactures and markets proprietary RFICs for wireless communications applications such as cellular and PCS phones, cordless phones, wireless LANs, wireless local loop handsets, industrial radios, wireless security systems and remote meter readers. The company offers a broad array of products - including amplifiers, mixers, modulators/demodulators, and single-chip receivers, transmitters and transceivers - representing a substantial majority of the RFICs required in wireless subscriber equipment. The company s strategy is to focus on wireless markets by offering a broad range of standard and custom-designed RFICs in order to position itself as a "one-stop solution for its customers RFIC needs. In the September 4, 2000 issue of FORTUNE magazine, RF Micro Devices was ranked second among FORTUNE s "100 Fastest Growing Companies." RF Micro Devices, Inc. is traded on the Nasdaq National Market under the symbol RFMD.

This press release contains forward-looking statements that relate to the company s plans, objectives, estimates and goals. Words such as "expects," "anticipates," "intends," "plans," "believes," and "estimates," and variations of such words and similar expressions, identify such forward-looking statements. The company s business is subject to numerous risks and uncertainties, including probable variability in quarterly operating results, risks associated with the operation of a wafer fabrication facility and the construction of a second facility, the company s ability to manage rapid growth, variability in production yields, the rate of growth and development of wireless markets, dependence on a limited number of customers and dependence on third parties. These and other risks and uncertainties, which are described in more detail in the company s Annual Report on Form 10-K filed with the Securities and Exchange Commission, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.

RF Micro Devices will conduct a conference call at 5:00 p.m. (ET) today to discuss fiscal second quarter results and comment on the Company s outlook. The conference call will be broadcast live over the Internet and can be accessed by any interested party at www.streetevents.com or www.rfmd.com.

Contact: Dean Priddy, Chief Financial Officer Tel: 336-931-7063 or Doug DeLieto, Dir., Investor Relations Tel: 336-931-7968 both of R F Micro Devices General information: Maura Gedid or investors Jean Young Tel: 212-661-8030, both of the Financial Relations Board