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RFMD ramps processing with $75 million plan

Leading GaAs HBT manufacturer RF Micro Devices is to invest $75 million in a bid to increase production volumes.

RF Micro Devices is to spend $75 million on an expansion of 6 inch wafer processing capacity at its GaAs fabrication facility in North Carolina. The company is expected to add 75 jobs to its payroll as a result.

RFMD co-founder Jerry Neal told Compoundsemiconductor.net that the capacity expansion was necessary to keep driving down the cost of its products in line with the 15-10% annual price erosion demanded by cell phone handset makers.

"We re adding cleanroom space and putting in the facilities, and the last stage will be moving in the processing equipment," said Neal. Around $25 million will be spent on the building itself, with a further $50 million earmarked for processing equipment.

"We see the coming year as one of major expansion of GaAs capacity, as well as reduction in cost and cycle time," added Neal.

The cell phone handset sector, which is the primary market for RFMD s products, is expected to continue its rapid growth next year, albeit at a slightly slower rate than has been seen over the past two years.

Nokia, the Finland-based market-leading maker of handsets and a customer of RFMD, has forecast 10% growth in total unit shipments next year on top of the 630 million figure it estimated for 2004. Other estimates put the 2004 figure even higher, at around 670 million.

However, Nokia expects the dollar value of the market to grow at a slower rate in 2005.

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