News Article

Filtronic Scales Back Fab Expansion Plans

Shrinking die-size requirements mean that the GaAs PHEMT manufacturer has decided to spend only £15 million expanding its UK facility, not the £45 million that had been forecast previously.

Filtronic, the chipmaker with a GaAs fab in Newton Aycliffe, UK, has cut the projected spend on its capacity expansion program from £45 million ($83 million) to £15 million.

In June, Filtronic announced plans to sell its wireless infrastructure division, which accounts for nearly 80 percent of its current revenue (see related story), along with details of a huge investment in the fab.

However, after analyzing the requirements of its customers in detail, Filtronic has now concluded that the die size of many of the PHEMT switches needed in the future will be smaller than previously envisaged.

As a result, many more such devices will be squeezed onto a 6-inch wafer and the manufacturing demands will not be nearly so great. Following the £15 million cash investment in the fab, the division should become self-financing, however.

Filtronic finance director Charles Hindson confirmed to that the company's compound semiconductor division should be "at or near" its break even point during fiscal 2007. In fiscal 2006, which ended on May 31, the division posted an operating loss of £5.1 million after sales rose sharply to £20.8 million, more than double the 2005 revenue figure.

Hindson added that Filtronic is now supplying a second customer with PHEMT die, and that a third would begin receiving shipments around the end of this calendar year.

RF Micro Devices, which remains Filtronic Compound Semiconductor's primary customer, is in the process of expanding its own facility to make GaAs PHEMT switches, although with demand for its products growing fast it may continue to use supplies from Filtronic.

Hindson added that it is mostly back-end fab equipment which is required for the £15 million expansion, with the majority of its epitaxy capacity already in place. Filtronic will continue to use a mixture of in-house and external supplies of epitaxial material in the future.

Expecting to see market adoption of PHEMT switches in 80 percent of mobile handsets over the next three years, the company now forecasts sequential revenue growth of over 25 per cent in the coming six months. Aside from the PHEMT market, Filtronic believes that there will be strong growth in non-switch GaAs-based products for filter and back-haul radio applications.

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