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25 July 2007


RFMD’s revenues fall 11%, but forecasts 9-16% bounceback this quarter

For its fiscal first-quarter 2008 (to end-June 2007), RF Micro Devices Inc of Greensboro, NC, USA has reported revenue of $211.6m (down about 11.2% from $238.3m a year ago and 17.8% from last quarter’s $257.3m). Net income has fallen from $30.1m to $25.3m.

RFMD says that the results are consistent with guidance provided on 24 April, reflecting weakness at “a large handset customer” (Motorola, the firm’s second-largest customer, which accounted for about a third of RFMD’s sales last year), offset partly by strength at other large cell-phone handset makers such as Nokia and Samsung.

In the Cellular sector, WCDMA revenue grew about 30% sequentially (and is booked for greater than 50% growth in the September quarter). Also, RFMD has just started production of its Polaris 3 RF solution and expects customer shipments to start in the September quarter. RFMD also signed a strategic supply agreement with a top-five handset maker, expecting sequential revenue growth to start this quarter.

In the Wireless Connectivity sector, wireless LAN front-end revenue grew more than 50% sequentially (and is booked for greater than 50% growth again in the September quarter). RFMD started shipping WLAN front ends to a new customer in cellular handsets, and it won a new 802.11n WLAN design at a “leading manufacturer of wireless broadband routers”. Also, RFMD’s GPS architecture has been selected by a ‘leading handset manufacturer’.

In the Infrastructure sector, at the IEEE MTT-S International Microwave Symposium in Hawaii in early June, RFMD launched the RF386x family of GaAs pHEMT multi-market low-noise amplifiers (with shipments starting to multiple base-station OEMs), as well as announcing the start of shipments of its high-power, wide-bandwidth RF3822 gallium nitride (GaN) PowerIC to a “top-tier military supplier”, and a new GaN design win for a high-power S-band military radar application (for which RFMD expects to start shipments in 2008). RFMD says it expects further customer orders for its GaN technology related to military communications, general-purpose amplifiers, radar and military jammers in the September quarter.

For the September quarter, driven by handsets and multi-market products, RFMD forecasts revenue to grow by 9-16% sequentially $230.0-245.0m (not including revenue growth from Motorola, with which RFMD has considerable design activity, the firm says).

“In our primary market of cellular handsets, RFMD expects to increase [market] share and grow dollar content [per handset] as mobile devices increase in complexity and require additional high-performance RF content [via cellular front ends],” says president and CEO Bob Bruggeworth. RFMD expects over 60% of its cellular revenue to come from WCDMA and EDGE products. The firm also expects to grow market share and increase dollar content per handset through sales of complementary cellular components and complete RF solutions, including its Polaris 2 and new Polaris 3 RF solutions (which are expected to start shipping this quarter, and will expand RFMD’s Polaris customer base to include an additional top-tier handset maker).

“Beyond handsets, we anticipate high-margin, diversified revenue growth, driven by sales of GaN devices, wireless LAN front ends and a broadening portfolio of multi-market products,” Bruggeworth adds. These products expand the firm’s total addressable market and are expected to increase its average gross margin. “Of note, we are experiencing favorable design activity related to our GPS products, and we anticipate our first high-volume shipments to a leading handset OEM in calendar year 2009.”

“We are capitalizing on our strong balance sheet to streamline our supply chain [bringing pHEMT switch manufacturing fully in-house by September] and accelerate our diversification efforts, both of which bolster our earnings leverage potential,” concludes chief financial officer Dean Priddy.

See related items:

RFMD expands Beijing assembly facility’s capabilities

RFMD breaks $1bn annually, but Motorola inventory correction depresses March and June quarters

RFMD prices $350m private placement; fiscal-year revenue to exceed $1bn, but forecasts slowdown next quarter