RF Micro Devices Inc., a global leader in the design and manufacture of high-performance radio frequency solutions, announced a new Gallium Arsenide (GaAs) sourcing strategy intended to increase manufacturing flexibility, expand gross margin, and support aggressive growth.
RFMD will phase out manufacturing in its Newton Aycliffe, UK-based GaAs PHEMT facility and transition most GaAs manufacturing to its GaAs HBT manufacturing facility in Greensboro, NC. RFMD will also partner with leading GaAs HBT foundries for additional capacity. The Newton Aycliffe GaAs PHEMT facility had been RFMD's primary source for cellular switches, which RFMD has transitioned to higher performance, lower cost silicon on insulator (SOI). The transition will occur over the next nine to 12 months to support existing millimeter wave customer contracts. Once implemented, RFMD expects annual cost savings of approximately $20 million, or $5 million per quarter.
Bob Bruggeworth, president and CEO of RFMD, said, "RFMD is enjoying increasing demand for our GaAs- and silicon-based RF solutions by delivering the industry's highest performance and most innovative products and technologies, including power amplifiers, switches, antenna tuners, and envelope tracking solutions. The combination of our industry-leading internal GaAs manufacturing capabilities and our external GaAs and silicon foundry partnerships support our longstanding commitment to Optimum Technology Matching,® satisfy the full breadth of our customers' performance, size, and cost requirements, and give RFMD unlimited growth potential. We expect these structural changes to have a lasting positive effect on the Company's cost structure, resulting in meaningful gross margin expansion."
RFMD is actively seeking a buyer for the Newton Aycliffe facility. If a buyer cannot be found, the facility will be closed once contractual obligations are met.