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Beijing's cellphone district cuts RFMD's costs

The GaAs power amplifier maker is moving test operations closer to its customer base and has received its first orders for a new product line made at the same site.

RF Micro Devices is to cut 80 jobs from its 2000-strong workforce at Greensboro, North Carolina.

The jobs will move to the chip maker s primary test centre in Beijing, allowing it to dispatch more of its products from China rather than the US.

RFMD expects to save over $3 million annually from the reorganisation - largely due to reduced shipping costs.

“Most of our customers are in Asia, more than in any other part of the world,” Jerry Neal, RFMD s executive vice president of marketing and strategic development, told compoundsemiconductor.net. “Actually, our test facility is right next to Nokia.”

The affected test operators were informed of the decision on April 16, and Neal expects the process to take two to three months to complete. The operators are responsible for a suite of up to 15 electrical checks that RFMD performs after its modules have been assembled, including power output and harmonics testing.

The redundancies and physical move of testing facilities will cost $1 million, RFMD says.

Currently many of RFMD s high volume GaAs products are being flown back and forth, being assembled and sold in Asia but tested in Greensboro. Now this bizarre process will cease, offering the company time savings as well as the obvious financial benefits.

Showing considerable loyalty, Neal expressed appreciation for the skills and contribution of the affected staff. RFMD says moving testing facilities away from Greensboro was a difficult choice "“ and is by no means an indicator of any upheaval at the company.

“As far as I know we re the only company in the US that still has testing inshore "“ all of our competitors already do their testing abroad,” Neal pointed out.

• RFMD has just received its first production orders for the latest product in its Polaris 3 module line. The Polaris 3 Silver adds conformal Microshield RF shielding to Polaris 3 s existing features.

“The Microshield technology is very low cost,” Vic Steel, RFMD s vice president of corporate R&D, told compoundsemiconductor.net. “It s a grounded coating on the surface of a module and it has some great implications for the cost, size and reworkability of our customers phone boards.”

RFMD highlighted that the Beijing-based module assembly of Polaris 3 Silver gave it a further cost advantage over its existing Polaris 2 and Polaris 3 products, for which assembly is outsourced.

• Also, Nokia "“ RFMD s largest customer - has reported a 28 percent jump in revenues and a 25 percent increase in profits over the same quarter last year. The Finnish phone maker recorded net sales of $12.7 billion and profits of $1.2 billion for the first three months of 2008.

Investment analyst Aaron Husock of Morgan Stanley has previously predicted that RFMD would ship 15 million Polaris 3 transceiver units to Nokia in the second quarter of 2008, amongst other business between the companies.

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