News | December 17, 2008

RFMD Announces Actions To Reduce Manufacturing Costs And Increase Cash Flow

Source: RFMD

Greensboro, NC -- RF Micro Devices, Inc. announced actions intended to streamline operations and reduce GaAs semiconductor manufacturing costs. RFMD(R) 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 state-of-the-art 6-inch wafer fabrication facility. The Company's 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% of the Company's total GaAs manufacturing capacity. As a result, the Company anticipates significantly lower direct material costs and higher utilization rates, resulting in lower total manufacturing costs.

In addition, in November RFMD(R) began significantly reducing its 6-inch wafer production and associated costs in its United Kingdom wafer fabrication facility. The Company will operate the facility on 8-hour shifts, 5 days a week, as compared to the 24/7 environment in which the facility currently operates.

Bob Bruggeworth, President and CEO of RFMD, said, "RFMD is taking prudent and decisive actions to match manufacturing capacity to anticipated demand during the current recessionary environment. 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% of its global workforce, will have been affected by these actions between December 2008 and March 2009.