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Phone sales set to go through the roof "“ report

Strategy Analytics upgrades its 2006 forecast for cell-phone sales, and now expects 1 billion handsets to ship this year.

Shipments of mobile phones will break the 1 billion barrier this year, claims a new report from market analyst Strategy Analytics.

If proved correct, the growth, largely fueled by strong sales from Nokia and caused by robust demand in emerging markets like India, would represent a 22% jump on last year's figure of 817 million shipments.

While Nokia remains slightly more cautious, predicting an industry growth rate of "at least 15%" this year, the boom in sales is more evidence of burgeoning demand for GaAs-based RF components used in the power amplifier (PA) and switch elements of cell-phones.

"We are seeing the move to PA-switch modules, increasing the overall GaAs content in products being sold," said Asif Anwar from Strategy Analytics.

Nokia is seeing fast uptake of more complex phones that combine EDGE with wideband-CDMA, which means that multiple PAs are needed in the handset. "As the handset moves to accommodate multiple bands, then the switches also need to become more complex, which increases the size of the switch die," Anwar added.

He reckons that the rapid increase in demand already being felt by the likes of RF Micro Devices, TriQuint Semiconductor and Anadigics will continue over the next two-to-three years.

RFMD has already begun its $80 million investment in extra fab capacity to meet that demand, while the hike in phone sales is also putting pressure on GaAs material suppliers.

Those suppliers are already taking measures to increase substrate manufacturing volumes by either adding new furnaces or using existing excess capacity.

Anwar believes that the increase in demand could allow substrate supplier AXT to mop-up demand from smaller companies. "I think that AXT can focus on re-establishing its reputation," said the analyst (see related story).

AXT posted total revenue of $8.5 million for the first three months of 2006, up from $6.6 million in the same period last year. Despite registering a loss of $2.2 million, the California-headquartered company with operations in China is expecting a big increase in demand during the coming months.

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