News Article

RFMD Set For Massive GaAs Capacity Expansion

With demand for handsets and power amplifiers rising strongly, RF Micro Devices says it will expand its Greensboro wafer fab to manufacture 40% more chips than it does currently.

Leading GaAs chip manufacturer RF Micro Devices is to increase the wafer manufacturing capacity of its Greensboro, NC, fab by 40% with an investment of $80 million.

The move comes amid rising demand for its power amplifiers, which are widely deployed in mobile handsets. Sales of advanced handsets, which require multiple PAs and therefore more GaAs content, are rising particularly quickly as 3G services become more popular.

"RFMD is making this strategic investment to capitalize on the rapid increase in worldwide demand for GaAs technology," said company CEO Bob Bruggeworth. "We are the leader in wideband-CDMA PAs, and we expect wideband-CDMA to be the world's fastest-growing air interface standard."

RFMD has a history of making big investments in GaAs capacity, and this is the fifth such expansion in its 15-year history. "RFMD views its continued investment in manufacturing capacity as key to its revenue and earnings growth," said the company in a statement.

Having already begun the expansion through an investment in additional processing equipment at its existing clean room facilities, RFMD says that volume production with the new kit will kick off in late 2006.

RFMD expects to add 300 new positions once the expansion is completed. The company has received a $4.9 million grant from the State of North Carolina through a job development incentive grant, and local county governments have pledged $1.5 million to the same end.

Suppliers of both GaAs substrate material and processing equipment have seen an upsurge in orders recently as demand for GaAs-based components for use in cell-phone handsets continues unabated.

Industry forecasts, including that from leading cell-phone vendor Nokia, suggest that more than 900 million mobile handsets will be shipped this year, representing a 15% increase on the 2005 figure.

100 million of those are expected to be 3G handsets, while RFMD adds that the growing market for wireless LAN compatibility in handsets is increasing GaAs demand still further.

The capacity expansion is expected to reduce RFMD's overall cost per wafer as it moves production of the GaAs PHEMTs that are critical to its transmit module product line in-house. RFMD currently outsources production of these components to Filtronic Compound Semiconductor in the UK.

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