Greensboro headquartered manufacturer of radio frequency devices, RF Micro Devices (RFMD) has decided to outsource the manufacture of its wafer starting material to manufacturer of semiconductor wafers, IQE plc.
As per the agreement, RFMD will shift its molecular beam epitaxy (MBE) wafer growth set-up to IQE. IQE will then begin to supply the MBE wafer starting material for RFMD’s wafer manufacturing establishments at Greensboro, North Carolina and Newton Aycliffe in the UK. RFMD manufactures Gallium arsenide (GaAs)-based semiconductor devices that consist of layers of transistors grown epitaxially by metal organic chemical vapor deposition (MOCVD) process or MBE process. The manufacture of starting material for the MOCVD process has already been outsourced. By September 2012, the transfer to IQE will be complete and IQE will start supplying both MOCVD and MBE-based wafer starting material to RFMD.
In what is touted as a mutually beneficial move to RFMD and IQE, Bob Bruggeworth, President and CEO of RFMD, stated that the contract will facilitate higher return on investment by lowering the cost incurred on MBE and MOCVD wafer starting materials. For the June 2012 quarter, RFMD’s non-cash GAAP charge owing to equipment and inventory write-off is estimated to be in the area of $0.02 to $0.03. The transaction is also estimated to be neutral to non-GAAP operating results.