5 August 2013

TriQuint’s revenue returns to year-on-year growth in Q2

For second-quarter 2013, RF front-end component maker and foundry services provider TriQuint Semiconductor Inc of Hillsboro, OR, USA has reported revenue of $190.1m. This is up 3% on $184.2m last quarter (although Q1 had been impacted by $5m of cost due to a now resolved quality issue) and up 7% on $178m a year ago (with growth in all three market segments).

Fiscal	Q2/2012	Q3/2012	Q4/2012	Q1/2013	Q2/2013
Revenue	$178m	$200.8m	$233.6m	$184.2m	$190.1m

End-market revenue split was 62% Mobile Devices (up from 57% last quarter), 24% Network Infrastructure (down from 28%), and 14% Defense & Aerospace (down slightly from 15%).

Mobile Devices revenue grew sequentially by 12%, while Networks Infrastructure revenue fell by 11%, and Defense & Aerospace revenue fell by 3%.

Subcontract assembly firm Foxconn Technology Group was the only customer exceeding 10% of total revenue (at 22%). The second-largest customer was Samsung.

“This report marks the beginning of the next phase of growth at TriQuint,” reckons president & CEO Ralph Quinsey.

On a non-GAAP basis, gross margin was 31.3%, up from 22.8% last quarter due to the absence of the now-resolved Q1 quality issue, higher revenue, improved factory utilization, and better yields. Operating expenses have risen from $68.3m last quarter to $69.6m, due mainly to additional engineering expense. Net loss was $10.9m ($0.07 per share, $0.04 better than the guidance given in April), an improvement on $27.2m ($0.17 per share) last quarter and $15m ($0.09 per share) a year ago.

Capital expenditures of $27.9m (down slightly from $29.4m last quarter), primarily related to capacity expansion for premium filters. During the quarter, cash and investments fell by $51.8m, from $141.1m to $89.3m. This was due primarily to a planned increase in inventory of $34.5m (in anticipation of a strong second half ramp) and repurchasing 7.7 million shares for $51.1m (although these uses of cash were partially offset by $20m hired for short-term liquidity).

In terms of technology developments highlights during the quarter, TriQuint produced “the industry's first gallium nitride transistors using GaN-on-diamond wafers”.

TriQuint also announced that it has accelerated its GaN offerings, with 15 new products and two new Foundry services. Additionally, the firm recently introduced new chipsets for point-to-point radios serving 3G/4G cellular backhaul. “In the year-to-date we have released 86 new products, and we’re on track to double our release rate as compared to 2011,” noted Quinsey.

In addition, TriQuint has doubled bulk acoustic wave (BAW) filter technology capacity compared to last year's levels.

“This third quarter is the beginning of a stronger period of performance for TriQuint, built on a differentiated strategy that is defensible and sustainable,” reckons Quinsey. “Our strategic focus is on innovation, technology and a comprehensive RF capability,” he added. “Our investments in proprietary GaN, BAW and advanced surface acoustic wave [SAW filter] technology are examples of where we set ourselves apart from the competition,” Quinsey claims.

Outlook

For Q3/2013, TriQuint expects revenue of $245-255m (up more than 30% on Q2). Despite operating expenses rising slightly to $70-71m, this should bring significantly improved gross margin (jumping to 34-36%) and a return to profitability (net income of $0.09-0.11 per diluted share).

“Solid results in the second quarter and our current expectation for the remainder of the year lead us to believe non-GAAP earnings of at least $0.05 per diluted share for fiscal 2013 is a reasonable expectation,” says chief financial officer Steve Buhaly.

“We have retooled our volume factor and aligned our mobile product strategy around premium filters, high-efficiency amplifiers and high-performance WLAN solutions,” notes Quinsey.

“For the five years prior to Q3/2011 our company grew at compound annual growth rate of over 20%,” says Quinsey. “Based on today’s guidance we expect year-over-year second-half 2013 performance back to those historic levels, and I remain bullish of our 2014 prospects… TriQuint has reinforced and reenergized our product development efforts across the company.”

Quinsey went on to detail some of the technologies and semiconductor issues that have faced the market in recent years: “Considering amplifier technology, there has been much speculation over the last ten years around GaAs HBT [heterojunction bipolar transistors] versus silicon. The question being if and when would silicon overcome GaAs or will silicon’s relatively low cost outpace the superior performance of GaAs,” he says. “The reality is the cost difference between silicon and GaAs in an integrated solution has become inconsequential due to extremely small GaAs [device] sizes. GaAs HBT continues to deliver longer battery life for years and will likely remain the technology of choice for all but the very low-end entry-level phones.”

See related items:

TriQuint’s revenue dives 21% in Q1 as Mobile Device revenue falls 30%

TriQuint’s sequential growth of 16% drives greater-than-expected revenue and income in Q4

TriQuint’s revenue grows 13% in Q3

TriQuint enters loss in Q2 as Mobile Devices demand falls 24%

Tags: TriQuint

Visit: www.triquint.com

Author: Matthew Peach, Contributing Editor