RFMD, TriQuint Finish On A High
Amid financial success, RFMD and TriQuint executives eye post-merger prospects. Compound Semiconductor reports.
RFMD and TriQuint shares rise on the back of pleasing financial results
With RFMD and TriQuint reporting very healthy quarterly results, shares for each company jumped between five and ten percent towards the end of October. TriQuint beat analysts' expectations with its latest round of revenue rising by almost 9% to $272 million, while RFMD reported a quarterly record as revenue soared by 15% sequentially.
In his second quarter 2015 earnings call, RFMD chief executive officer, Robert Bruggeworth, repeatedly emphasised how company revenues are being driven by 'an exploding demand for mobile data'. "Across the mobile data landscape, consumers are demanding more bandwidth to support data-hungry applications," he highlighted. "RFMD solutions are a key enabling technology... and [the company] is supplying the industry's leaders the products they need to differentiate their devices."
And Ralph Quinsey, TriQuint chief executive, agreed, attributing improving finances to buoyant communications and defence markets demanding GaAs and GaN devices, and filters. "BAW [filters]... generate hundreds of millions of dollars in revenue that had modest roots in the defence market," he said. "GaN based products... are following a similar path with new opportunities openings in base station power and other commercial applications that require higher power, higher efficiency and greater bandwidth."
However, change is afoot, and come the next finance quarter, industry players are likely to be listening to the results of Qorvo, the new company to emerge from the pending RFMD-TriQuint merger, scheduled to complete by the end of this year. Dubbed 'a merger of equals', executives from both sides are, predictably, upbeat about future company prospects.
Throughout their earnings calls, neither chief executive would be drawn on specific future products; in Bruggeworth's words: "We have not realised any synergies between the TriQuint and RFMD merger yet". But each highlighted overwhelming shareholder support for what will be a formidable presence in the RF chip industry.
Without a doubt, handset markets represent a massive opportunity for the new company. As Bruggeworth highlighted: "We will have the various technologies that we believe are needed in the RF front end for the handset in particular."
"There's opportunity for us to gain some [market] share as we come together and get our product and technology roadmaps aligned," he added.
But base station power markets are also significant. According to Quinsey, third quarter revenues in this market hit a hefty $25.6 million, up more than 53% compared to the same time last year.
"We continue to experience strong demand related to the worldwide 4G LTE build out," he said. "Over the last 18 months, demand for our base station products has ramped to just north of $100 million a year. We expect to maintain this level... well into 2016."
Ralph Quinsey, TriQuint: base station markets are key.
And as wireless infrastructure markets evolve, China, followed by India, look set to offer some golden opportunities. Executives from RFMD and TriQuint were keen to point out how China's LTE infrastructure market remains steady while the same again in India is showing signs of growth.
"[Compared to India] I've seen more activity on the China LTE buildouts," highlighted Norman Hilgendorf, RFMD president of multi-market product groups. "But everybody is expecting that India will be hot on the heels of China in building out LTE infrastructure as there's a large subscriber base that going to want the benefits of 4G."
Quinsey concurred, stating: "For India and China, we have seen a good solid buildout throughout the year... [that will be] sustained for quite a long time."
But also for the present TriQuint chief executive, defence markets remains as crucial as ever. His company has continued to launch GaN product after GaN product, reaping the ensuing defence revenues.
"We remain in the early innings of a defence industry upgrade cycle with the ramp of the joint strike fighter and the retrofit of US and international fleets to phase [in] radar and advanced electronics," he said. "I expect Qorvo will benefit from this legacy technology development."