News Article

RFMD Culls Shanghai Operation

Consolidating Chinese test and assembly into Beijing site and global redundancies are not a reflection of further worsening in chipmaker's business, says CFO.

Leading GaAs power amplifier manufacturer RF Micro Devices is to part with over 100 more staff as it reorganizes its back-end manufacturing and operating expense structure.

RFMD will now close its Shanghai test and assembly operations, combining some of the functions into its Beijing site and outsourcing others.

This move is set to be completed before the end of September, although the exact impact on headcount is currently not known.

However the company will also part with around 100 sales, administrative and R&D staff worldwide in a separate action before the end of March. Around half of these losses will occur at RFMD s Greensboro, North Carolina, headquarters.

“These actions simply get our expense structure inline with the reduced demand environment," RFMD s chief financial officer Dean Priddy told compoundsemiconductor.net.

“This news is definitely not signaling that things are getting worse in terms of the business climate. If anything, in some of our key markets order patterns have stabilized and actually begun to improve over where they were.“

“I don t want to mislead you that we ve got a full blown recovery underway. However compared to where things were in the December quarter and in the month of January, things are definitely incrementally getting better in terms of order rates."

Priddy explained that taking some of the work done in Shanghai on at its other sites and outsourcing the rest will enhance RFMD s overall manufacturing efficiency.

Combined with steps already taken, these actions will put RFMD s expense model where it needs to be, Priddy said. “Assuming revenue comes in about where we planned, you're going to see significant improvements in our financial performance."

He also emphasized that any reductions in R&D had been carefully planned to not impact critical projects for key customers or strategic development programs.

Together the operating expense and manufacturing restructuring will cost RFMD $17.5 million for employee benefits, cancelled leases and obsolete equipment.

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