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Shrinking die size cuts RFMD's costs

The company has entered production with a cellphone radio module that saves on material.

Reducing GaAs die sizes to the same level as competitors technology is playing a central part in improving profitability at RF Micro Devices.

The chip manufacturer said on November 12 that volume production of a GaAs-based 2G GSM/GPRS cellular handset transmit module, which exploits smaller die, has now commenced.

The RF3283CR is a direct replacement for RFMD s existing high volume RF3283 2G product. It contains a PHEMT switch and power amplifer and is now rolling out of the Durham, North Carolina firm s fabs - reducing the total amount of GaAs used by 40 percent.

“Combined with the large chunk of multilayer laminate substrate, those are the two biggest cost drivers in an RF front end,” said Eric Creviston, president of RFMD s cellular product group.

Creviston says that the module, which will ramp into full production in the first three months of 2009, can be made for “a remarkably lower cost”.

“It comes down to getting our GaAs die sizes in line with, or better than, industry averages, and getting our substrate costs and other parts of our supply chain in-line.”

The executive admits that RFMD has been a generation behind the rest of the GaAs industry in die size. What he had previously thought was “irrational pricing” in its competitors low-cost products actually indicated more economical manufacturing processes.

RFMD modules with smaller GaAs die have been in the hands of lead customers for several quarters, and are now being introduced across the company s product range.

While Creviston concedes that RFMD has only recently reduced its GaAs die size, the overall module circuit area is 50 percent smaller than the rest of the industry. The number of surface-mount devices in RFMD s module is also 25 percent fewer than in those made by its competitors.

An additional benefit of reduced die sizes is the effective capacity increase that it brings, by being able to fit more devices on the 6-inch GaAs wafers RFMD uses. The firm says that this should ensure three years without needing significant further capital investment in capacity.

The company s recent exit from the transceiver business has added 40 percent to its handset-focused workforce, raising it to 350 engineers and technicians. This has helped RFMD introduce its largest ever quarterly number of new handset products in the three months to September.

With the various technical refinements in place, RFMD management noted that profit margins continued to improve in October, while cashflow was also better than planned.

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