- 31 March 2006 -

RFMD fab expansion - 40% capacity boost will drive revenue growth

RFMD, the provider of proprietary RFICs for wireless communications applications, has announced an $80 m fab expansion. Its Greensboro campus is expected to increase RFMD's wafer manufacturing capacity by approximately 40% from current levels - enabling continued robust growth in wireless markets utilizing RFMD's market leading GaAs HBT and GaAs pHEMT process technologies.

The expansion is also expected to reduce RFMD's cost per wafer and provide available capacity to increase internal production of GaAs pHEMT - a critical enabling technology in the Company's market-leading transmit modules.
Growing demand for RFMD's GaAs technology is being fuelled by multiple factors, including market share gains and robust demand for mobile devices. According to industry forecasts, greater than 900 m handsets will ship in 2006, driven by emerging markets and new feature-rich devices. Within these handsets, a growing number will feature RFMD's PA modules and RFMD's transmit modules, which integrate GaAs pHEMT transmit switch technology with the Company's GaAs HBT PA technology. In addition, 3G (or multi-mode) handsets contain multiple transmit chains and require multiple PAs. Industry analysts currently forecast sales of 3G handsets will double in both 2006 and 2007 to approximately 200 m units. Finally, in the growing market for WLAN in handsets, RFMD is experiencing increased demand for its WLAN front-end modules (FEMs), which feature both GaAs HBT and GaAs pHEMT technologies.

Bob Bruggeworth, president and CEO of RFMD, said, "RFMD is making this strategic investment to capitalize on the rapid increase in worldwide demand for GaAs technology. We are the leader in cellular transmit modules, driven by shipments to our two largest customers, and we expect our leadership to grow this year as we add customers for these products. Of note, our projected growth in transmit modules is partially attributable to growing demand for RFMD's POLARIS 2 TOTAL RADIO Module Solution for both GPRS and EDGE handsets.
"We are also the leader in WCDMA power amplifiers, and we expect WCDMA to be the world's fastest growing air interface standard. WCDMA handsets have multiple PAs, which also contributes to the increasing worldwide demand for GaAs. Finally, shipments of our WLAN power amplifiers and front-end modules have continued to grow, and we expect 802.11n - which uses multiple input multiple output (MIMO) technology - to be a major driver of GaAs demand as it is established as a standard and proliferates in notebooks and handsets."

RFMD's components and system solutions are featured in many of the most popular devices made by the world's leading wireless manufacturers. These customers are increasingly presenting new, incremental opportunities to RFMD. The Company expects its ability to capture these incremental opportunities - and increase its semiconductor content in mobile devices - is strengthened considerably by this expansion and the commitment it demonstrates to its customers.

This is the fifth capacity expansion RFMD has announced in its 15-year history. RFMD views its continued investment in manufacturing capacity as key to its revenue and earnings growth. The Company's quarterly revenue was $150.4 m in the March 2005 quarter when the previous fab expansion was completed, and increased to $208.0 m in the December 2005 quarter, less than one year later.
RFMD has begun expanding its wafer fabrication equipment base in existing clean room facilities, and volume production is anticipated in late 2006. The Company was the recipient of a Job Development Incentive Grant (JDIG) from the State of North Carolina that provides up to $4.9 m in tax credits to assist the Company with the expansion. RFMD also received a collective pledge of nearly $1.5 m from the city of Greensboro and Guilford county governments. RFMD expects to add 300 new highly-skilled positions at the expanded facility.

Web: http://www.rfmd.com