News

23 July 2008

 

Anadigics’ sales grow to record $80.5m, driven by broadband

For second-quarter 2008, GaAs-based component maker Anadigics Inc of Warren, NJ, USA has reported its 13th consecutive quarter of revenue growth, to a record $80.5m. This is up 8.2% on last quarter’s $74.4m and 49.4% on $53.9m a year ago, and above April’s forecast of $77-79m.

Gross margin has improved from 36.8% last quarter to 38.4%, and net income has risen from $1.9m a year ago and $3.9m last quarter to $6m.

Revenue growth is due mainly to broadband revenue rising almost $8m (35%) from $23.2m last quarter to $31.2m. This more than compensated for wireless revenue of $49.3m, up 78% on $27.7m a year ago but down $1.9m (3.7%) from $51.2m last quarter.

“Our second-quarter 2008 results were driven by strong sequential revenue growth in broadband for both WiFi and CATV including initial production shipments of our new digital tuner, FiOS and DOCSIS 3.0 products,” says president and CEO Dr Bami Bastani.

Entering third-quarter 2008, broadband revenue is expected to continue to grow strongly, partially offsetting an expected decline in wireless. Bastani says that certain customers have built up inventory in the channel and in critical components such as power amplifiers, and consequently have lowered their demand expectations. For example, a large Korean customer is halving inventory, while some weakness is seen among 3G handset makers in China, depressing Q3/2008 wireless revenue by up to 10%. Anadigics expects total sales of $75-81m, up 26-36% year-on-year on a comparable basis but barely up on Q2/2008. The firm says that the lower end of this range reflects the softness in industry demand and inventory re-balancing that may occur in Q3 with wireless customers.

However, Bastani believes the slowdown in wireless to be temporary, as design-in activity has increased (highlighting the addition of new customers and platforms such as smart-phones at Research-in-Motion) .

“The company’s balance sheet remains strong as we continue to invest in sustaining business growth for the long-term,” says Tom Shields, executive VP and chief financial officer.

Anadigics is increasing its capacity via a ‘three-pronged’ approach: continuing to focus on operational efficiency in its Warren fab; adding flexible wafer capacity by developing foundry relationships (to comprise 10-20% of business: wafer qualification and characterization is in progress and should be completed in Q4/2008) ; and building a new 6” GaAs wafer fab in Kunshan, China (announced on 11 April 2007), in order to meet future demand ( increasing the firm’s fab capacity by 40% initially).

Due to the confidence in its business fundamentals, Anadigics now says that it will accelerate its China capacity expansion, including doubling the total investment in the build-out of the Kunshan fab from $49.88m to about $100m. This is expected to enable completion of building construction by October, with expanded fab capacity starting up in third-quarter 2009. Also, the firm has initiated the immediate recruiting of the required resources, and expects to incur start-up costs of $1m in third-quarter 2008. Anadigics expects to be able to fund the China investment from internally generated operating cash flows and cash on-hand. However, if advantageous, it says that it will explore other available and alternative means of financing.

See related items:

Anadigics sales rise 10% to a record $74.4m

Anadigics to build 6-inch GaAs fab in China

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