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Freescale selling GaAs business to Skyworks

The semiconductor giant has entered into an agreement to sell its RF power amplifier business to Skyworks, leaving a question mark hanging over the future of its "CS1" GaAs fab.

Freescale Semiconductor has agreed to sell its GaAs power amplifier (PA) business to fellow RFIC manufacturer Skyworks Solutions.

A spokesman for Freescale, which was acquired by a private equity consortium led by The Blackstone Group and The Carlyle Group in December 2006, confirmed that the deal had been struck, saying that it "represented good value for both companies".

The agreement includes GaAs PA designs, intellectual property, inventory and product lines, although it does not include Freescale s "CS1" wafer fab, located in Tempe, Arizona, and the site for the company's GaAs device production.

As a result, a question mark now hangs over the future of that fab. Freescale says that it is looking at a number of potential options, but that "no definitive decision" has been made as yet.

While Freescale is a giant in the wider semiconductor industry, it has been a relatively small player in the PA sector. Strategy Analytics Asif Anwar estimates that it holds less than a 1 per cent share of the overall market for GaAs RF components.

In contrast, rising demand among the dominant GaAs PA suppliers has seen many announce plans to expand manufacturing scale recently, with Skyworks set to switch from 4 inch to 6 inch wafer production at its HBT facility in Newbury Park, California (see related story).

Meanwhile, predictions of an increasingly consolidated GaAs industry have turned out to be correct, with the shareholders of RFMD and Sirenza Microdevices approving a merger in the past couple of days (see newsfeed entry).

Speculation over Freescale s entire RF semiconductor operation now looks likely to increase, with some expecting the business unit to be sold off, enabling a greater focus on software and services.

John Lau from the investment bank Jefferies believes that the CS1 fab may be closed in the near future, although Freescale insists that no decision has been made.

Lau also believes that the industry consolidation will be good for the remaining suppliers, in particular RFMD, who may be able to benefit from what he sees as product uncertainty at Freescale with increased shipments of its own Polaris 2 modules.

Asif Anwar says that more consolidation could follow, as the industry moves towards a point where there are just four or five major suppliers, and Japanese vendors increasingly employ an out-sourced manufacturing model.

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