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RFMD to mothball historic 4-inch GaAs fab

The cellphone PA maker is temporarily reducing output to cut costs in response to the most rapid slowdown that its founder, Jerry Neal, has ever seen.

Leading GaAs manufacturer RF Micro Devices is to cut up to 150 jobs at the fab in Greensboro, North Carolina, where it first started wafer production.

The jobs will be lost as output at the historic 4-inch HBT facility known as “Fab 1” is run down over the first three months of 2009.

“We announced that we're going to idle Fab 1 last week,” RFMD executive vice-president and co-founder Jerry Neal told compoundsemiconductor.net on December 16.

“We have enough capacity in the larger 6-inch facility here on the same property which we ll be combining the activities from the 4-inch fab into.”

The cellphone PA maker has cut its sales outlook following a gloomy, but non-specific, business update for the last quarter of 2008 from Nokia.

“Being our largest customer, this of course has an effect on us,” Neal said. “Therefore we ve been looking at ways that we can lower costs and streamline our manufacturing.”

Overhead costs on RFMD s product assembly operations are already low as this function is largely outsourced. It has also just completed a re-organization of its R&D structure initiated in May that saw around 350 employees exit the company.

Consequently RFMD is now shutting Fab 1, but it will do it in a way that will allow it to be brought back online when demand returns.

“We re keeping it clean and much of the equipment is being left in place so that it could be quickly brought back up,” Neal explained.

Together with cuts due at its UK PHEMT switch fab before the end of 2009 (see related story), RFMD will eliminate up to 250 jobs from its overall GaAs manufacturing operations.

Although cellphones PAs have always been RFMD s core products, Neal emphasizes that demand is slowing across all of its markets as the world plunges into recession.

“We re doing everything that we can from a product development point of view and working with our customers,” he said.

“We re not losing market share to our competitors that we re aware of. It s strictly worldwide demand for our products.”

“I ve seen a lot of these cycles, but I can t say I ve ever seen one get this severe so quickly.”

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