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RFMD to lower manufacturing costs

Posted: 24 Dec 2008 ?? ?Print Version ?Bookmark and Share

Keywords:RFMD reduce cost? GaAs semiconductor operation? streamline manufacturing?

RF Micro Devices Inc. intends to streamline its operations and reduce GaAs semiconductor manufacturing costs. RFMD expects the actions will begin to take effect in the March 2009 quarter and will positively impact cash flow in RFMD's fiscal 2010, beginning March 29, 2009.

At RFMD's Greensboro, NC campus, all GaAs manufacturing will be transitioned to the company's 6-inch wafer fabrication facility. Its 4-inch manufacturing facility will be idled and kept in a clean environment. Prior to this decision, RFMD's 4-inch manufacturing facility accounted for less than 10 percent of the company's total GaAs manufacturing capacity. As a result, RFMD anticipates significantly lower direct material costs and higher utilization rates, resulting in lower total manufacturing costs.

In addition, RFMD in November began significantly reducing its 6-inch wafer production and associated costs in its United Kingdom wafer fabrication facility. It will operate the facility on 8hr shifts, five days a week, as compared to the 24/7 environment in which the facility currently operates.

"RFMD is taking prudent and decisive actions to match manufacturing capacity to anticipated demand during the current recessionary environment," said Bob Bruggeworth, president and CEO of RFMD. "By reducing RFMD's manufacturing cost structure, these actions are expected to positively impact cash flow by approximately $15 million in fiscal 2010. Because existing facilities will be reduced or idled, RFMD will retain the capacity and flexibility necessary to respond to increases in customer demand as the recession wanes and as the company's markets return to growth."

RFMD estimates approximately 250 employees, or approximately 5 percent of its global workforce, will have been affected by these actions between December 2008 and March 2009.

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