RF Micro Devices Considers Third Business Unit

Company explores the possibility of a third business unit focused on fabrication services.

GREENSBORO, N.C. -- Consumer migration toward smart phones presents both a challenge and market opportunity for RF Micro Devices Inc. The Greensboro, N.C., manufacturer of radio-frequency systems used in mobile phones and other electronic applications has been trying to diversify its customer base for several years to reduce its exposure to market fluctuations.

The companys strategy includes the possible creation of a third business group, Jerry Neal, an executive vice president and RF Micro Devices co-founder, told IndustryWeek. The search for new revenue sources comes as one of RF Micro Devices top customers, Nokia, saw its market share in the first three months of 2011 decline 5.5 percentage points from the year-earlier period. The drop sunk Nokias market share to its lowest level since 1997, according to a Gartner research report. Nokia is grappling with increasing market pressure from Googles Android operating system, Gartner notes.

RF Micro Devices has taken steps to lessen its dependence on Nokia by increasing business with other mobile-phone producers, including Samsung, LG and Research in Motion, says Neal. One of the companys strengths is its expertise in gallium-arsenide chip technology. The company has built upon its knowledge in gallium arsenide to bring higher-power gallium-nitride technology to market.

The company is one of the first manufacturers to sell gallium-nitride products commercially, says Eric Higham, director of gallium arsenide and compound semiconductor technologies at research firm Strategy Analytics. One of the primary markets for gallium nitride is in cable television power transmission. Gallium nitride is considered a greener technology because it uses less energy to produce the same amount of amplification as other technologies, Higham says.

Foundry Services Offer Growth

RF Micro Devices also plans to continue growing its foundry services as another way to expand beyond the handset phone market. Currently, the company has two business groups, one focusing on cellular products and the other concentrated on multimarket products. The foundry services unit is currently part of the multimarket products group.

But Neal says the company is exploring ways to create a third business unit dedicated to providing fabrication services to other companies.

Whether or not that will happen, were still working on it, but we are starting to get traction on pieces of that, Neal says. This would be using our technology in gallium arsenide to provide services to other companies. So they would send their design to us, we would fabricate it for them and send them a chip using our existing equipment.

Another potential growth area for the company is in the renewable energy market. In 2009, RF Micro Devices began working with the National Renewable Energy Laboratory to develop solar cells using gallium arsenide technology.

We think this is a market that is still unknown as to how large it will be, but it appears its going to be a huge market. This calendar year and certainly next year the growth in that area is well over 100% a year, Neal says. What were starting to see is some rather large systems being deployed.

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