- 14th November 2006

Strategy Analytics Optimistic for RF & Opto

In the second quarter of 2006, the majority of RF component suppliers reported strong profits, in many cases driven by continued demand for components for cellphones, according to Strategy Analytics. Not coincidentally, TSMC and Qualcomm reported the highest profits.

More than half of the leading suppliers of RF components reported significant profits in Q2, about the same industry financial performance as reported in Q1.
According to Chris Taylor, director of the RF & Wireless Component service, "While reported profits remained strong, investor confidence and stock prices weakened during the second quarter, most likely exacerbated by investigations into stock option backdating at several RF component suppliers."

"Marvell Semiconductor's proposed acquisition of Intel's products for mobile handsets also seemed to shake investor confidence," said Stephen Entwistle, vice president of the Strategy Analytics Strategic Technologies practice. "However, in spite of the weaker stock performance in the sector, venture capital firms continued to put money into RF component start-ups, especially those involved in WiMAX, mobile TV and compact antennas for mobile devices."

A high number of joint ventures and mergers and acquisitions took place in the compound semiconductor industry during the third quarter of 2006, according to the Strategy Analytics GaAs and Compound Semiconductor Technologies (GaAs) research and advisory service.

In the RF space, Freescale joined the private equity ranks of Avago and NXP as it agreed to be acquired by a private equity consortium in a transaction worth $17.6 Billion, while Jazz Semiconductor merged with a wholly-owned subsidiary of Acquicor Technology Inc.
In the optoelectronics arena, Epistar’s move to acquire two more of Taiwan’s InGaN LED makers could propel the company into the global top five of InGaN LED suppliers. However, this consolidation has not deterred silicon DRAM manufacturer ProMOS and equipment manufacturer, Hermes-Epitek, from announcing a joint venture to form EpiLED.
"Consolidation in the LED market, especially in Taiwan, is a prerequisite to improving product quality and consistency so that the solid state lighting community can start serving the general lighting markets," notes Asif Anwar, GaAs service Director. "While it may seem surprising to many observers that Promos and Hermes-Epitek have chosen to enter this consolidating market, the joint venture can be successful if it is able to harness silicon-style manufacturing philosophies to LED manufacture."

"The increased merger and acquisition activity surrounding companies active in the RF industry underlines the continued strength of the RF markets," notes Stephen Entwistle, VP of the Strategy Analytics Strategic Technologies Practice. "The appetite of private equity firms for companies such as Freescale underlines strong performance as a result of healthy demand from end markets."

In addition, the Strategy Analytics' RF & Wireless Component service "RF Component Industry Review: April - June 2006," notes that more than half of the leading suppliers of RF components reported significant profits in Q2, about the same industry financial performance as reported in Q1.

In the second quarter of 2006, the majority of RF component suppliers reported strong profits, in many cases driven by continued demand for components for cellphones. Not coincidentally, TSMC and Qualcomm reported the highest profits.

According to Chris Taylor, Director of the RF & Wireless Component service, "While reported profits remained strong, investor confidence and stock prices weakened during the second quarter, most likely exacerbated by investigations into stock option backdating at several RF component suppliers."

"Marvell Semiconductor's proposed acquisition of Intel's products for mobile handsets also seemed to shake investor confidence," added Stephen Entwistle, VP of the Strategy Analytics Strategic Technologies Practice. "However, in spite of the weaker stock performance in the sector, venture capital firms continued to put money into RF component start-ups, especially those involved in WiMAX, mobile TV and compact antennas for mobile devices."

Web: http://www.strategyanalytics.net/