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29 July 2009


Samsung helps Anadigics to revenue gain

GaAs power amplifier manufacturer Anadigics has a reported a small sequential increase in sales, thanks largely to growing business with Korea-based mobile phone makers Samsung and LG.

The New Jersey-based semiconductor company, which is striving to rebuild its formerly very strong customer relationship with Samsung, said revenues increased 3% in the second quarter to $31.5m.

Previously, it had indicated that sales would slump by up to 10% in the second quarter, but the return of Samsung as one of its top customers helped to deliver the turnaround, and it now anticipates a 5-10% increase in the third quarter too.

However, the marginal sales improvement still represents a year-on-year decrease of 61% when compared with the second quarter of 2008, and it resulted in a quarterly net loss of $14.3m for the three months ended July 4.

So far this year, Anadigics has posted a cumulative net loss of $36.2m.

CEO Mario Rivas, who replaced Bami Bastani after manufacturing problems led to a dramatic slump in business with Samsung last year, says that the company is concentrating on rebuilding customer relationships and operational excellence.

“We were able to serve [Samsung] well in the second quarter,” said the CEO in Anadigics' latest investor conference call. By the end of this year, he expects sales to the Korean giant to reach up to half of their earlier peak.

Central to the operational strategy is maintaining a cycle time of less than 40 days between order placement and delivery, and a device yield of more than 90%. Its previous difficulties saw that cycle time extend beyond 80 days, pushing some of its key customers to rival suppliers.

As part of its recovery plan, Anadigics will also implement a hybrid wafer production strategy. Currently, it is evaluating a second supplier of GaAs wafers and Rivas declared himself “quite satisfied with the results”.

Although Anadigics' own fab utilization remains low – increasing from around 30% to 50% through the summer months – Rivas is confident that new design wins and increasing uptake of 3G connectivity in phones and netbooks will put more pressure on Anadigics' fab capacity by mid-2010. Within the past week Samsung has said that it will source wideband-CDMA power amplifiers from Anadigics for use in its new Omnia HD and Memoir handsets.

Another key customer, Intel, is also now evaluating its power amplifiers for a new mobile platform, while mobile computing specialist Palm has placed Anadigics in the wideband-CDMA version of its new flagship “Palm Pre” device.

To help avoid any repeat of the capacity problems seen previously, fab systems are being upgraded to eliminate production bottlenecks.

Rivas is also excited about the new availability of the 800-900MHz spectrum in the US, a space vacated by analog TV signals, and Anadigics is already working on 3G products suitable for the low-frequency slots.

The CEO believes that Anadigics already fills around half of all 3G power amplifier slots globally, and is well-positioned to take advantage of future demand for fourth-generation protocols like LTE.

See related items:

Anadigics’ revenue falls by a third, driven by WLAN and cable shortfall

Anadigics sales drop 22% as fab utilization heads towards 30%

Anadigics cuts 15% of workforce

Anadigics’ revenue falls more-than-expected 28%

Search: Anadigics GaAs


The author Michael Hatcher is a freelance journalist based in Bristol, UK.