RF Micro Devices(R) Announces New Gallium Arsenide Sourcing Strategy

RF Micro Devices, Inc. of Greensboro, Massachusetts USA, announced a new
Gallium Arsenide (GaAs) sourcing strategy intended to increase manufacturing
flexibility, expand gross margin, and support aggressive growth. As part of the
new strategy RFMD says it 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 says it will also partner
with leading GaAs HBT foundries for additional capacity. Previously, the Newton
Aycliffe GaAs pHEMT facility had been RFMD’s primary source for cellular
switches. RFMD says that it is transitioning 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, commented, “We expect
these structural changes to have a lasting positive effect on the Company’s
cost structure, resulting in meaningful gross margin expansion.”

RFMD also reports that it is actively seeking a buyer for the Newton
Aycliffe facility. If a buyer cannot be found, RFMD says that the facility will
be closed once contractual obligations are met.