Booming RFMD tipped to win chip "arms race"
RF Micro Devices is looking forward to a record quarter as the traditional cell-phone buying season kicks off and the company takes market share away from its competitors in the RF power amplifier business.
The Greensboro, NC, GaAs chip manufacturer posted $177 million in sales for the quarter that ended September 30, representing a 19% year-on-year increase, and is now projecting further sequential growth of up to 20% for the holiday period.
"During the September quarter, we experienced record order activity, driven by increased demand for our power amplifiers, transceiver chipsets and Bluetooth products," said CEO Bob Bruggeworth.
With the introduction of transmit modules featuring PHEMT switches manufactured by the UK company Filtronic, RFMD also believes that it will steal market share from its rivals in the forthcoming quarter, traditionally the strongest of the year for cell-phone handsets.
If its projection proves accurate, RFMD stands to post quarterly revenue for the three-month period ending December 30 of around $210 million, a figure that would be a company record.
Dean Priddy, RFMD's CFO, added, "Our strategy of increasing dollar content within the handset is working."
And it isn't just RFMD executives that believe the company is moving away from its rivals.
Investment analyst John Lau from Jeffries and Company also believes that RFMD is emerging as the leader in the highly-competitive RF semiconductor sector as it gains "significant" market share.
"We believe this arms race should culminate with RFMD as the leader and consolidator in this fast-growing market," said Lau.
That trend looks set to continue as the company looks to consolidate its position: "RFMD is aggressively ramping production of its new transmit module," said Lau (see related stories). "The modules greatly increase RFMD's dollar content per phone."
While Filtronic is currently supplying RFMD with GaAs PHEMT antenna switches made at its fab in Newton Aycliffe, UK, Lau believes that some of these devices will be fabricated in-house by RFMD in the near future. That should improve the company's profitability as it also looks to expand its fabrication capacity.
RFMD's fast-improving sales, as well as higher final test yields, resulted in a $5.9 million profit for the quarter ended September 30, turning around the losses recorded in both the prior quarter and the comparable period last year.
