RF Micro Devices was raised on radio -- high-performance radio-frequency (RF) components, that is. RFMD makes a variety of RF devices and compound semiconductor technologies for markets that include cellular handsets, wireless infrastructure, wireless local area networks (WLAN or WiFi), cable television broadband, and advanced metering for Smart Energy. Many of the company's chips are made from gallium arsenide (GaAs) -- a material valued for wireless applications because of its speed and efficiency. RFMD's top customer is Nokia, which accounts for nearly 40% of the company's sales. Customers in Asia represent more than 75% of sales.
RFMD is expanding its presence in the Asia/Pacific region, boosting its module assembly and test operations in China in 2011.
Year-over-year revenue rose more than 7% in 2011 thanks mainly to strong sales of cellular products. Multi-market products products also did well in response to demand in both the wired and wireless markets.
By segment, revenue for the cellular products group (CPG) increased 50% (excluding Nokia), while the multi-market products group (MPG) was up 30%. Consistent with the company's goals for customer diversification, Nokia's contribution decreased from 55% of revenue in 2010 to 39% in 2011.
RFMD expects that trend to continue as it gains market share in CPG and grows its MPG business. In 2011 most CPG sales were for 2G devices, but the company is emphasizing the market for smartphones -- which have more RF components -- for more sales in 2012. To that end, in late 2012, it agreed to acquire California-based Amalfi Semiconductor for $47 million; Amalfi serves the smartphone market.
CPG provides power amplifier modules, transmit modules, and cellular switches for handset OEMS. MPG serves such industries as communications and aerospace/defense with RF components and also supplies foundry services for producing GaAs and gallium nitride (GaN) wafers.
After posting lower sales and profits in fiscal 2008, the company initiated a restructuring to reduce its role in wireless systems, while continuing to compete in RF components and compound semiconductors. RFMD cut its operations in cellular transceivers, Global Positioning System (GPS), and other wireless systems. The company reduced its workforce by about 12%. Continuing to restructure operations in 2009, RFMD consolidated its test and assembly operations in Shanghai with those in Beijing. The restructuring resulted in more profit in 2010 and 2011.
RFMD depends on third parties to provide component parts, substrates, and silicon-based products, and also to manufacture products for the company on a contract basis. In 2012 the company sold its molecular beam epitaxy (MBE) wafer growth facility to IQE, a supplier of advanced semiconductor wafers, to cut manufacturing costs. Concurrently, IQE signed an agreement with RFMD to supply MBE- and MOCVD-based starting material.
RFMD has been working with the National Renewable Energy Laboratory to develop a commercially viable and high-volume manufacturing process for photovoltaic solar cells, using compound semiconductor devices. The lab is attached to the US Department of Energy.
RF Micro Devices has operations in China, Denmark, France, India, Japan, South Korea, Taiwan, the UK, and the US. – less