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Refocused RFMD Eyes Up $10bn Market

Rapid growth of its multi-market product group and improving handset business fail to offset restructuring charges at the GaAs chip maker, but its vision for the future is a rosy one.

RF Micro Devices says it has wrested share of the cellular front end market away from its competitors, despite recording a $24.1 million net quarterly loss.

RFMD terminated its research into GPS and silicon-based transceivers at a cost of $26.5 million in the period ended June 2008, and the company is now talking up its regained GaAs focus.

“GaAs usage is going to increase over the next few years," pointed out Dean Priddy, RFMD s chief financial officer. “We re now looking at an $8 billion to $10 billion total addressable market for RF components and compound semiconductor related products."

“Some are going to benefit more than others and obviously, we think we fall into that category."

The Greensboro, North Carolina, company said that sales of front ends grew by 10 percent in the quarter. Revenues from its multi-market product group (MPG) grew by more than 20 percent, and RFMD believes that these figures show it's strengthening its position in both segments.

“Our business at Sony Ericsson doubled, Samsung tripled, and LG grew significantly," Priddy said. “We also grew with one of the other top five handset vendors. RFMD was clearly a share gainer."

These trends combined to push RFMD s overall sales to $240.5 million, up 9 percent sequentially and 13.7 percent year-on-year.

Transceivers were responsible for dragging the strong quarterly sales growth seen in other product lines back down below 10 percent overall. However RFMD does expect to see a small increase in its sales of Polaris transceiver lines through the rest of 2008.

The company says it has already completed the 10 percent overall reduction in headcount that arose from ceasing GPS and transceiver development. The entire cost reduction process is now around 95 percent complete, Priddy said.

Each of the five business units within the MPG grew in the last quarter, and RFMD says that this group will easily exceed its $250 million revenue target for the company's fiscal year 2009.

Interest in the company's GaN process is such that MPG's manager, Bob van Buskirk, says that four of his five business unit managers are pounding on his door daily with new applications.

Van Buskirk says that the company is currently shipping pre-production GaN prototypes for military ground based test and radar systems. RFMD is now in the final phases of commercial qualification for its GaN process.

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