News Article

3G Prompts 6-inch Switch For Skyworks

The Massachusetts-based firm is the latest GaAs company to unveil plans for a major capacity expansion - although it will not be building any new fabs.

Following in the footsteps of rivals Anadigics, RF Micro Devices and TriQuint, chip maker Skyworks Solutions is converting its GaAs HBT facility in California from 4-inch to 6-inch wafer production.

In a response to burgeoning demand from tier-one customers in the cellular handset market, Skyworks is also expanding its partnerships with foundries in Taiwan to meet the need for extra capacity.

"We are implementing a hybrid capacity expansion model to maximize our internal capabilities while at the same time leveraging external partnerships," is how Skyworks VP of worldwide operations Bruce Freyman described the switch.

Unlike most of its rivals, Skyworks has long resisted the temptation to move to the larger wafer size, citing the fact that its fully-depreciated 4-inch facility minimized financial overheads (see related interview feature).

In contrast, Anadigics switched to a 6 inch platform as early as 1999 - a move echoed by TriQuint, RFMD and others.

However, Skyworks, which outsources epiwafer production to its key supplier Kopin, will not require any new buildings to support the expansion.

Again, this contrasts with the strategies implemented by its main rivals. RFMD, for example, has just revealed plans for a new 6-inch wafer facility in Greensboro, while Anadigics is already constructing a 6-inch fab in China (see related stories).

Freyman believes that this is the best option for Skyworks, as it will minimize the cost of the expansion.

"Our balanced approach is less capital intensive and more flexible, allowing us to meet customer demand without compromising gross margin or other key operating metrics," said the VP.

"These initiatives position Skyworks to support well over $1 billion in annual compound semiconductor revenue."

Demand for GaAs-based RF components and, in particular, transmit modules incorporating a variety of GaAs ICs, appears to be growing sharply at the moment.

That demand is being driven by the relative complexity and the high-linearity requirements of multi-mode front-end modules used in 3G cell phones.

These handsets are expected to represent the majority of phones sold in 2009, when the total annual market for all cell phones is expected to reach 1.2 billion units.

However, changes in chip manufacturing requirements can be unpredictable, and Skyworks clearly believes that relying on the flexibility offered by its foundry partners when necessary is the best option for meeting sudden surges of demand.

"This model...will cost substantially less than building a new standalone facility," explained Freyman.

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