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25 July 2007


Anadigics reports ninth quarter of growth, up 8.7%, driven by 3G

For second-quarter 2007, RFIC maker Anadigics Inc of Warren, NJ, USA has reported record sales of $53.9m, representing its ninth consecutive quarter of growth (up 37% on $39.3m a year ago and up 8.7% on Q1’s $49.6m, compared to the expected 5-7%).

Net income was $1.9m, compared with $1.2m in Q1 and $2.8m a year ago. Pro forma income (excluding non-cash stock compensation expense) rose $2.0m sequentially to $5.7m.

Of total revenues, 48% came from broadband wireless products (2.5G, 2.75G and 3G multimedia handsets), 22% from broadband mobility (WLAN 802.11a,b,g,n MIMO and WiMAX, smartphones and datacards), and 28% from broadband wireline (CATV set-top boxes and CATV infrastructure, which grew 40% and 69% year-on-year, respectively). In particular, for WLAN, the 802.11a, b and g standards accounted for 70% of unit sales and 802.11n for 30% (up from just 10% in Q1/2007), respectively. However, by revenue, this split was 55%:45%, showing the higher value of 802.11n products.

In terms of growth, broadband product group revenues were up 6.3% sequentially, driven by strong set-top box demand. Revenue for first-half 2007 was up 54% year-on-year, driven by very strong demand for wireless LAN and CATV.

Wireless product group revenues were up 11% sequentially and 24% year-on-year for the quarter, led by very strong 3G revenue. Revenues for first-half 2007 were up 27% year-on-year.

In particular, the record overall revenue was driven by the Anadigics’ 3G portfolio, for which revenue grew 38% sequentially and 83% year-on-year, says president and CEO Bami Bastani. While wireless comprised 52% of overall revenue, this includes 3G products comprising as much as 49% of overall revenue (i.e. 97% of wireless revenues, with growth in 3G more than offsetting GSM revenues dropping from 12% of wireless revenues in Q1/2007 to just 3% in Q2).

“Anadigics is well positioned strategically in the three growth markets of 3G, WLAN and CATV to capitalize on our strong market position,” says Bastani. Anadigics top customers in Q2/2007 were Cisco, Intel, LG Electronics, Huawei, and Samsung. Bastani adds that recent shifts in handset market share (away from Motorola) have favored Anadigics’ customers Samsung and LG, which have gained market share, boosted by ‘better 3G portfolios’ (as well as rating as the top two phone brands in the USA for advanced entertainment features such as mobile TV, games and music, with 22% and 20% market share for such phones, respectively, compared to just 6% for the nearest competitor).

During Q2/2007, Anadigics shipped power amplifiers to LG Electronics for its VX8700 Shine 3G mobile phone and its TV-capable VX9400 phone, to Samsung for its SGH-F500 MPEG4 video 3G phone, its SPH-m610 3G EVDO handset, its SCH-u540 Neon 3G handset, and its SGH-I520 smartphone (which is using Anadigics' AWT6223 UMTS/EDGE 3G penta-band power amplifier), and to Huawei for its music-optimized U120 3G mobile phone.

In addition, in mid-May Anadigics entered the EDGE market by launching the AWT6172 quad-band Linear EDGE power amplifier module. This new product has gained significant market traction, says Bastani, and should contribute to growth in Q3/2007. Anadigics also launched its ARA2017 programmable gain upstream amplifier and AIT1061 integrated wideband data tuner (the industry’s first complete RF front-end chip-set for cable modems designed to meet the new DOCSIS 3.0 specification, it is claimed), which are expected to ramp in mid-2008 .

Demand for new products is continuing to accelerate rapidly, says chief financial officer Tom Shields, fuelling strong growth prospects for second-half 2007 and 2008. For third-quarter 2007, Anadigics expects revenue to rise by about 10% sequentially and 35% year-on-year, driven by wireless revenues.

Correspondingly, Anadigics increased its R&D spending over the planned amount for Q2/2007 (contributing to increased operating expenditure), he adds. In future, R&D expenses will be maintained at about $0.5m per quarter.

In addition, Anadigics invested $8m in capital expenditure during Q2. The existing GaAs wafer fab in Warren, NJ now supports quarterly revenue run-rates of $85-90m. Capex in 2008 is expected to be $15-20m, adds Shields. Bastani confirms that the new wafer fab in the Kunshan New and Hi-Tech Industrial Development Zone, China (which broke ground on 9 July) will take about nine months to complete construction and should start operation by Q1/2009. After being ramped up in stages, once fully equipped it should double Anadigics’GaAs fab capacity.

See related items:

Anadigics breaks ground for 6” GaAs fab in China

Anadigics continues 40% year-on-year growth and cuts losses after shedding fiber-optic subsidiary

Anadigics to build 6-inch GaAs fab in China

Anadigics raises $98.8m for capital expenditure