INDUSTRY MICROELECTRONICS
will also have less bill-of-material costs than the device it replaces.” So the management taking charge may not only need to address the excess capacity of the combined outfit, but make further trimmings due to moves to more sophisticated PAs.
Additional challenges for this board will be to manage the transformation in a way that optimises the existing talent, while maintaining a focus on customers. What will help the leaders of both companies is that they have been involved in acquisitions before: RFMD acquired Sirenza in 2007 and Filtronic in 2008, while TriQuint acquired CAP Wireless in 2013 and WJ Communications in 2008.
Shares in TriQuint and RFMD have soared since the merger of the two companies was announced on 24 February, 2014
products and find other customers.” These efforts ultimately paid dividends when Skyworks found a winning formula in the smartphone market, and the likes of Samsung and LG launched popular products.
Higham blames the troubled times at Nokia for the downward path taken by RFMD, which should soon stop its slide. “It seems that RFMD have bottomed out, and they are now heading back up again with revenue and profitability.”
Thanks to the merger, Higham thinks that the new outfit’s handset business can do even better. “TriQuint brings filter technology to the party, and I would think that should provide a good leg-up for the combined
company. RFMD is pushing pretty heavily on the front-end module approach, and being able to have filters in there – and to have them home-grown – will be an attractive feature.”
To operate the handset division at healthy margins, the new company will need to cut costs. “There is some overlap, and they will [have to] figure out what to do with that,” warns Higham. He points out that this decision must be made against the backdrop of a move to multi-band, multi-mode PAs, which could have a bigger short-term impact on the GaAs business than the emergence of CMOS PAs. “It is GaAs design cannibalizing itself. That multi- band, multi-mode PA will consume less area than the devices it replaces, and it
To ensure that the merger goes well, the leadership will need to strike a fine balance between moving too quickly and failing to get the right people in the right positions, and taking so long that it has a negative impact on the staff. “Potentially, it’s a very unproductive time,” says Higham. “Engineers don’t deal well with uncertainty. If you say to yourself: ‘What is the future going to hold?’, you might start looking around.” And if the most talented decide to leave, they will find it easiest to get a new job, and their exit will create the biggest holes to fill.
Further consolidation? An additional impact of the merger is that it could trigger further consolidation: Many have already been asking Higham if that is likely to happen.
On the handset side, he feels this is unlikely: “Skyworks are happy with their business model. They were forced into diversification early and they have done a good job at it.” And he believes that Avago – the only other firm in the top four that is not involved in the RFMD- TriQuint merger – is content with its position. He expects the company to do “business as usual” while it focuses on optical, automotive and other markets.
“Once you get passed the [top four], you take a big drop down to the number five company,
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www.compoundsemiconductor.net June 2014
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