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News

25 October 2007

 

TriQuint makes gains, despite cost of Peak Devices acquisition

For third-quarter 2007, RF front-end IC maker TriQuint Semiconductor Inc of Hillsboro, OR, USA has reported revenues of $122.9m (up 19% on a year ago and 8% sequentially). Revenues comprised 54% for handsets, 35% networks, and 11% military; with 65% from Asia (up dramatically from 48% last quarter), 24% from the Americas (down from 38%), and 11% from Europe. For the sixth quarter in a row, Motorola and Samsung each contributed more than 10% of revenues.

Handset revenues grew 35% year-on-year (consisting of GSM/GPRS 43%, CDMA 39%, wideband CDMA, EDGE etc 18%). Transmit module revenues grew 185% year-on-year (CDMA up 440%; GSM up 110%). In particular, wideband CDMA/EDGE revenue doubled. After a slightly later-than-expected launch, TriQuint is now shipping millions of units per quarter of its EDGE transmit module.

Revenue for point-to-point radio products rose 46% on a year ago (due to increases in backhaul demand for remote locations). Ground-station product revenue rose 52%. TriQuint also achieved five design wins in the cable market. Military revenue grew a faster-than-expected 10%.

Because revenue gains were supported by inventory reductions, factory utilization was flat on last quarter. In particular, GaAs equipment utilization was about 70% (below the targeted 85-95%), leaving capacity for continued growth, says CEO Ralph Quinsey.

Operating expenses were $39.5m (32.2% of revenue), up on $30.7m (26.9% of revenue) last quarter. Net income was $1.9m: though up from $1.4m last quarter, this is down from $8.1m a year ago. However, this is due mainly to increased R&D spending of $1.5m and in-process R&D charges of $7.6m from the acquisition of Peak Devices. Excluding these, net income was a higher-than-expected $11.8m, up on $3.5m last quarter.

Gross margin was 32.2% (up from 26.5% last quarter).

Despite capital expenditure of $5.6m and a net cash payment of $14.7m to acquire Peak Devices , cash reserves rose from $154.8m at the end of June to $174.7m at the end of September.

“This was a strong quarter for TriQuint with solid revenue growth from each of our major markets,” says president and CEO Ralph Quinsey. This is due to strong growth in the firm’s markets combined with improved execution, he adds.

“Integral to TriQuint’s strategy is our broad technology portfolio, the broadest in the industry,” Quinsey claims. “This includes multiple compound semiconductor technologies, SAW filters, BAW filters and high-volume module capability,” he adds. Furthering this strategy, the acquisition of Peak Devices brings new products and technology for wideband applications.

TriQuint is currently expanding its product offering with new multifunction devices and application-specific filters for the radio and bay station markets. “These integrated RF solutions are reducing system design complexity and improving performance for our customers,” Quinsey says, who expects revenue to ramp in Q4/2007 and Q1/2008.

Triquint has also raised its expectations for the military market, with interest in upgrades for existing airborne radar systems, technology migration to non-airborne radar systems, and opportunities in communications and electronic counter-measures (boosted by the addition of wideband capability from Peak).

Quinsey says that TriQuint is also continuing to attract funding for its gallium nitride development program and to complete key milestones. With stable, reliable process technology now in place, the firm is moving into the product design phase.

In Q3, bookings were a record $144m. For fourth-quarter 2007, TriQuint is currently 87% booked and expects revenue of $125-130m (up 21-27% on a year ago).

Quinsey outlines prospects as: growing handset revenue driven by multiple standards; and expanding growth drivers into non-handset markets. While making additional investment in R&D, continued efficiency improvements and improved product mix should also yield improved margins. Quinsey targets that, when TriQuint’s achieves $160-170m in quarterly revenue, gross margin should be 40% (dependent on a good product mix, keeping handsets in the 54-58% range).

See related items:

WIN closing gap to TriQuint in GaAs foundry market

RFMD, Skyworks and Triquint grew GaAs device market share to 55% in 2006

TriQuint acquiring Peak Devices for wide-bandwidth amplifier design

TriQuint’s profits slashed despite growth in WLAN, WCDMA/EDGE and transmit modules

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