RF Micro Devices Inc. (RFMD), a provider of proprietary radio frequency integrated circuits (RFIC) for wireless communications applications, announced that the company's Board of Directors has approved the expansion of RFMD's assembly operations. The expansion, which is projected to be on line during the June quarter of 2006, is expected to increase RFMD's internal assembly capacity by approximately 50 percent, representing approximately 25 percent of the company's assembly requirements.
RFMD's assembly operations, which are located in Beijing, China, were brought on line in 2005. Previously, the company outsourced all of its semiconductor assembly services to third party assembly vendors. By increasing internal assembly capacity, RFMD has significantly strengthened its supply chain and has reduced manufacturing costs, which are a primary contributor to the company's ongoing initiatives to increase gross margin.
Jim Stilson, vice president of operations for RFMD, stated, "As RFMD continues to take market share in transmit modules and cellular transceivers and as customer forecasts for these products have continued to increase for calendar 2006, this assembly expansion underscores our commitment to provide our customers with capacity to meet their growing needs. Our Beijing team is demonstrating world-class assembly performance, and we expect that this expansion will have a meaningful impact to both our ability to meet customer demand and reduce our cost structure. Also, with assembly and test being located in the same building, we get the additional benefit of reduced cycle time and lower inventory carrying cost."
"Expanding assembly capacity is consistent with our overall corporate goal of improving profitability," commented Dean Priddy, chief financial officer for RFMD. "Our in-house assembled products have lower manufacturing costs, allowing improved gross margin versus components assembled by third parties."