MWRF: RFMD is widely recognized as a manufacturer of gallium-arsenide (GaAs) compound semiconductors. At this year's International Microwave Symposium (IMS) in Boston, MA, the company announced the availability of GaN foundry services. Why the move toward GaN?
BV: Gallium nitride (GaN) is a revolutionary high-power compound-semiconductor technology that has been in development at RFMD for several years. GaN offers performance advantages not achievable with other mainstream power semiconductor technologies, such as silicon LDMOS and GaAs. We believe RFMD GaN is in fact a "game changer" in end markets requiring high power, high frequency, and high operating efficiencies.

MWRF: Do you think the microwave industry is starting to see GaN as a more viable technology?
BV: In the mid-to late-90s, I worked for a large government contractor, TRW. With our commercial partner at that time, RFMD, we drove the adoption of GaAs heterojunction-bipolar-transistor (HBT) technology and took it into the mainstream. I see quite a few parallels between GaAs at that time and GaN today. Based on what I saw at the MTT show in Boston, it certainly looked like GaN is nearing mainstream status. There was very little discussion with RFMD about whether it is too exotic, commercially viable, manufacturable at scale, and so forth.

MWRF: Please tell me about RFMD's GaN technology in particular.
BV: RFMD is offering both our product and GaN foundry customers access to RFMD's industry-leading technology and production facility and the many benefits that our scale manufacturing capability deliversincluding reliability, uniformity, cycle time, and quality. Going back to the example of GaAs HBT, when RFMD teamed up with Nokia and wanted to build tens of thousands of HBT wafers, TRW was quite challenged because we didn't have the commercial scale to support the handset industry. While our GaN technology is in the final stages of the transition to mainstream, our technology has a tremendous scale advantage because it's manufactured "in situ," embedded in our very large and efficient wafer fab. Our GaN production line shares process technology and volume wafer-fab expertiseeverything that's not specific to the equipment setup for GaN. All of the support and infrastructure, as well as employees, needed to support the world's largest GaAs wafer fab are in place to also support our embedded GaN wafer fabrication.

MWRF: How does that translate into GaN's advantages from a "green" environmental perspective?
BV: I've seen statistics indicating that the cost of energy accounts for more than 50 percent of mobile operator's operating expense. GaN is capable of achieving the combination of very high power and high linearity at very significant efficiency levels. In other words, GaN can attain power levels needed for cellular applications at lower current consumption (i.e., more linear power for less energy consumed). Our customers can essentially get the same or in some cases better performance while consuming less power. These power-consumption advantages extend to wireless and wireline applications, such as cellular base stations, defense radars, and power amplifiers as well as hybrid fiber/coax line amplifiers. We have substituted our GaN devices for GaAs FET devices in our CATV power amplifiers and have received customer feedback that the same high-performance amplification has been realized using GaN for 20 to 30 percent lower power consumption. Lowering the energy consumed to operate various networks and other power applications is a key aspect of the "green" nature of GaN.

MWRF: RFMD is known as a leader in the handset space. Yet the firm is now diversifying to go after a variety of markets including military and industrial. What was the impetus for these moves?
BV: The Multi-market Products Group (MPG) was chartered to help bring diversity to RFMD. The theory in acquiring Sirenza Microdevices and establishing MPG was to enable RFMD to diversify its business and to take advantage of the scale driven by the handset business. In other words, it was to provide a platform to leverage and re-deploy scale technology and integration levels to customers in performance-driven, niche markets. MPG, for WiMAX power amplifiers, uses the same internal wafer fab and assembly and test factory in China that we use for handset products. We ship on the order of one to two million RF components per day out of Beijing. The high-performance niche WiMAX infrastructure power-amplifier ICs take advantage of all of that scale. We have many examples of scale and technology synergies being enjoyed today by MPG.

MWRF: Is defense growing for RFMD?
BV: Yes. GaN is a beachhead for us in defense. We have a defense business that's largely inherited from the Sirenza acquisition, but it's a small percentage of MPG sales todayless than 10 percent. We're looking forward to our GaNbased power products driving revenue growth in applications such as highperformance amplifiers, radars, jamming devices, and much more.

MWRF: Please explain how the company's current business breaks down according to market (handset, military, etc.).
BV: Within MPG, the largest end markets are wireless or cellular infrastructure, WiFi, WiMAX, SmartGrid (including AMR), CATV line amplifiers, RF catalog components, and defense applications. Our Cellular Products Market (CPG) represents approximately 75 percent of our revenue and MPG 25 percent. The RF content of smart phones is expanding, as is our footprint within cellular handsets. We're starting to do switch filter modules now, for example. And we're looking at additional components, such as duplexers and antenna tuning switches. The total addressable market for CPG is growing in the front end spacein part because of 3G and smart phones because they're multiband, multimode. But our growth is also occurring because we're expanding our footprint in the cellular handset front end.

MWRF: RFMD has nicely weathered this downturn. To what do you attribute the company's financial stability?
BV: In May of 2008, we restructured the company to focus on RF components and compound semiconductors. We also moved away from some very large R&D investments required for wireless systems opportunities and refocused our development resources on our core RF component business. Consequently, we reduced our operating expenses by more than 30 percent year over year and redoubled our efforts on our handset front-end module and MPG components business. We've worked hard to build a more flexible and agile RFMDone that's able to achieve our target operating model of 15-percent operating margin. While we didn't see the recession coming like most companies, the experiences we went through in our restructuring efforts equipped us well to react quickly and effectively to the recession. With our new mission and flexible operating model, we set clear financial targets for operating profit and return on invested capital (ROIC). Our recent financial results speak for themselves.

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