News Update Markets & Business

RFMD Cree announces record sales for LEDs

jazzes up Cree, Inc. reported revenue of quarter of fiscal 2002. Net ability to exceed both our $48,811,000 for the first quar- income for the comparable revenue target and consensus silicon ter of fiscal 2003, which repre- year ago period was earnings estimates.We have sents a 29 percent increase, $6,460,000, or $0.09 per share. continued to experience capabilities sequentially, over the compa- LED shipments increased more increased demand for our LED ny's fourth quarter fiscal 2002 than 50 percent, sequentially, to products fueled by new design revenue of $37,800,000 and a record levels and average sales wins in a number of applica- RF Micro Devices, Inc.(RFMD) 13% increase over the compara- prices increased slightly over tions including cell phones. and Jazz Semiconductor, a pri- ble year ago period revenue of the fourth quarter of fiscal Our challenge has shifted to vately held, high-performance $43,166,000. Net income for 2002. managing our capacity expan- RF and mixed-signal silicon the first quarter was sion to fulfill increased cus- wafer foundry, today announced $3,883,000, or $0.05 per share, Chuck Swoboda, President and tomer demand requirements they have agreed to enter compared to a GAAP loss of Chief Executive Officer of Cree and we are targeting LED sales into a strategic relationship for $22,521,000, or $0.31 per stated, "We are extremely to be above record levels set in silicon manufacturing and share, reported for the fourth pleased with our results and the first quarter." development.

Under the arrangement, RF Micro Devices will obtain a guaranteed, lower cost source of supply for wafers fabricated Triquint to buy Agere's utilizing Jazz Semiconductor's manufacturing processes, including silicon germanium opto business (SiGe), bipolar complementary

metal oxide semiconductor TriQuint Semiconductor, Inc. buyer for all or parts of this fit for TriQuint as we have (BiCMOS) and RF CMOS. In will acquire a substantial por- business, and exiting the opto- bccn involved in the design addition, RFMD will collaborate tion ofAgere's optoelectronics electronics business as part of and production of integrated with Jazz on the development business for $40 million in its corporate restructuring. circuits and products for of technology cash.The transaction includes TriQuint estimates this busi- the optical networking busi- roadmaps, including joint the products, technology and ness will have revenue some- ness for over 15 years, and process development and the some facilities related to where between $50 and it is a core part of our optimization of these processes Agere's optoelectronics busi- $75 million for calendar year company. for fabrication of next-genera- ness, which includes lasers, 2003 and is projecting that it "This acquisition makes us one tion silicon RFICs.The arrange- detectors, modulators, passive will be accretive to earnings of the world's leading suppli- ment is expected to help components, arrayed wave- per share by the fourth quarter ers of optical modules and RFMD develop proprietary guide-based components, of 2003. components.The consolidation mixed-mode silicon technolo- amplifiers, transmitters, As part of the transaction, of the operations and the gies for its system-on-chip receivers, transceivers, approximately 300 Agere restructured workforce will (SOC) integration roadmap. transponders, and MEMS research and development, greatly reduce our costs (micro electro-mechanical The two companies also process engineering, market- compared to Agere's previous systems). announced that RFMD has ing, product management experience. agreed to invest $60 million in The transaction does not and assembly and test Through a transitional Jazz for a minority equity posi- include Agere's business provid- employees will join TriQuint. manufacturing agreement, tion in the company. Jerry Neal, ing optoelectronics compo- The companies anticipate Agere will supply components executive vice president of nents for CATV (cable televi- closing the transaction in for TriQuint for a short period strategic development and co- sion) transmission systems, January 2003, subject to following the transaction founder of RF Micro Devices, based in Alhambra and regulatory approval and closing Agere currently will join the board of directors lrwindale, CA.Agere is continu- other customary closing manufactures the majority of of Jazz Semiconductor. Closing ing to pursue a buyer for that conditions. these components at its of these transactions is subject business. Commenting on the transac- Breinigsville, Pa., facility which to customary conditions. ForAgere's fiscal year ended tion, Ralph G. Quinsey, TriQuint will acquire following Jazz is a leader in advanced September 30, 2002, the busi- President and CEO of TriQuint the transition period.TriQuint SiGe BiCMOS and RF CMOS ness TriQuint is acquiring had stated, iI am delighted that we will also acquire the back-end manufacturing processes with revenue of approximately $192 have been able to reach agree- assembly and test operations at substantial, state-of-the-art sili- million.Agere announced in ment with Agere to acquire Agere's Matamoros, Mexico con foundry resources. August 2002 it was seeking a this business. It's a natural facility.

lll-Vs REVIEW :~ >,/,; LE VOL t5 - NO 9 - NOV/DEC aoo2 News Update Markets & Business

Picogiga turns to Umicore as it fights for survival

Picogiga's core business is initiated by Picogiga on its con- sufficient level of equity and as well as to develop down- growing epitaxial layers on vertible bonds (issued in 2001) enough cash to meet its R&D stream opportunities such as compound semiconductor sub- achieving a minimum success and operating commitments. epitaxy, for applications in the trates - mainly GaAs wafers - rate of 80%, allowing a signifi- However, should the plan fail electronics and optoelectronics using MBE technology.The cant strengthening of the corn- by not obtaining the required industries. paw's balance sheet. One 80% of threshold, this would company has had a leading According to Umicore, the bond would be exchanged for prevent the capital increase by position in the epi-wafer mar- company's intention is to take 8 new shares. Umicore from taking place. ket but has seen sales fall advantage of the current weak- sharply from g20 million in After completion of this According to Umicore, Picogiga ness of the semiconductor 2000 to Cll.5 million in 2001. restructuring, Umicore would offers a sound fit with Umicore market to build a growing hold between 40 and 47% of Advanced Materials' strategy. In With third quarter turnover position in anticipation of a the outstanding shares of addition to extending the use unlikely to exceed C 1 million, future market recovery. In this Picogiga (for an investment of of germanium to other applica the management of Picogiga context, several initiatives in {5.5 million) and three out of tions than space solar cells, has deemed it necessary to semiconductor wafers are cur- six seats on the Board of Umicore's stated strategy is to seek a short-term re-capitaliza- rently being pursued within Directors. broaden its expertise in sub- Umicore Advanced Materials' tion and cash infusion strategy Venture Unit, including the (subject to the approval of the The management is confident strates technology by entering the market for the most development of SiC and InP market authorities). that after restructuring, Picogiga would have a advanced generation of wafers, substrates. After studying various options, Picogiga is currently finalizing an agreement with Umicore (listed on Euronext Brussels) whereby Umicore would pro- (million ~) H 1 2001 H 1 2002 vide a capital investment.The Consolidated turnover (including contracts) 8.59 4.62 agreement is subject to certain conditions, including the Operating result -2.30 -5.17 restructuring of Picogiga's exist- Net result -3.41 -6.02 ing financial debt. Shareholders equity end of June 8.68 -10.8 43.8 The restructuring involves a Net indebtedness end of June 35.65 Public Exchange Offer (PEO)

Dr. Sam Lee joins GCS as CEO

Global Communication As CEO, Sam will report directly been responsible for profitable even more apparent." said Semiconductors (GCS) Inc., a to the Board of Directors and sales growth and increased mar- Dr. Lee. pure-play III-V compound semi- be responsible for GCS' growth ket share at these companies. Global Communication and profitability. Sam received his Ph.D. from conductor wafer foundry, Semiconductors Inc., based in announced today the selection Ohio State University. "After a long and extensive Torrance, California, an ISO of Dr. Sam Lee as its new CEO. search, the management team is "GCS's potential as a pure-play 9002 certified company, pro- "I am extremely pleased to extremely excited to have Dr. III-V compound semiconductor vides compound semiconduc- appoint Dr. Sam Lee as Chief Sam Lee joined GCS" comment- wafer foundry is yew exciting. tor foundry services to the Executive Officer of Global ed by Dr. Owen Wu, founder GCS has a great business model wireless telecommunication Communication Semiconduc- and Chief Strategy Officer of that answers the current market and high-speed networking tors. I have known Sam for GCS. Sam has 28 years of semi- trend of major companies out- industries. GCS currently offers years and finally have the conductor experience with 23 sourcing compound semicon- foundry service for both InGaP opportunity to work with him. of those years in high profile ductor wafer fabrication to and InP HBT processes and Sam's past experiences and tri- leadership roles with compa- reduce manufacturing costs. provides optoelectronic umphs are an ideal fit for GCS." nies such as Fairchild, , Due to the pressures of the foundry services for PIN diodes Comments Don Brooks, Chair- Raytheon Semiconductor, current world economy the used in the fiber optic commu- man of GCS' Board of Directors. AMCC and TRW LSI. Hc has opportunities for GCS are now nication market.

ili-Vs REVIEW ; ' :;4 ~,~ ~ . ~<--~ -v :: VOL~5- NO9- NOV/DEC ~oo~ 6 Markets & Business News Update

Production Second source qualified for solutions for Skyworks wafers laser and LED manufacturing Inc.,has "After meticulous testing, we're the highest in the industry," said announced that the company pleased to announce that AWSC Tom Chi, president of AWSC. Unaxis Semiconductors will has qualified Advanced Wireless has met our rigorous process, "We are extremely proud of supply its GaN LED and laser Semiconductor Co. (AWSC) as a quality and reliability require- having achieved this milestone, fabrication process solution to second source to provide ments and is now qualified and look forward to strengthen- Highlink Technology Corpora- Skyworks with Gallium for production," said Kevin ing our relationship as Sky- tion for its new LED manufac- Arsenide (GaAs) heterojunction Barber, senior vice president of works' business continues to turing facility in Hsinchu,Tai- bipolar transistor (HBT) operations for Skyworks. "The grow." wan.The selected Unaxis tech- foundry processing services. qualification of AWSC for HBT nologies include deposition of GaAs HBT is the technology of foundry services improves hard masks (SiO 2 and Si3N4) and Located in the Tainan Science- choice for a variety of wireless Skyworks' ability to meet cus- final passivation. Additionally, an Based Industrial Park in South cormaaunications devices, tomer volume and second NE 860 IL system will be used Taiwan,AWSC is one of the including power amplifiers for source demands." for etching GaN features. world's first foundry companies digital cellular handset and dedicated to the manufacturing "S!q~vorks' quality procedures third-generation () wireless The Unaxis dielectric deposi- of high-quality GaAs devices. and specifications are among voice and data products. tion processes use the patented Plasma Box ® technology, bene- fiting customers with highly uniform, low temperature film deposition; fast and repeatable TriQuint and QinetiQ form deposition; as well as in-situ chamber cleaning, using envi- ronmentally friendly SF6.

GaAs IC design alliance The Unaxis NE 860 IL induc- tively coupled plasma etching QinetiQ and TriQuint local, experienced, qualified services that include highly system meets the following semiconductor foundry cus- third-party design resource for integrated, full custom MMIC customer demands: tomers now have a UK the TriQuint Semiconductor product designs on a broad • Production proven, easy resource for Texas processes. These spectrum of gallium arsenide maintenance ICP technology IC design services. An agree- include the 0.25urn mmw- and indium phosphide • Fast, repeatable etch rates ment to use QinetiQ*s pHEMT and O.15um LN- processes. with excellent selectivity to Microwave and Millimetre- pHEMT processes," says Lisa hard masks This service is complimented wave IC design services in Howard, Foundry Services • Real time in-situ end point by QinetiQ's expertise in the conjunction with TriQuint's Manager for TriQuint detection design, prototyping, produc- GaAs IC foundry services SemiconductorTexas. "Its pre- tion and test of highly integrat- Kenny Sun, President of High- has been announced and vious design experience with ed Microwave and Millimetre- link, said, "We have chosen the provides customers with TriQuint Texas processes will wave sub-systems, up to 100 production solution from Un- a UK based turnkey bolster our presence in the UK GHz. Specific application axis Semiconductors not only Microwave and Millimetre- and EU and help us support areas addressed by recent because its process technology wave IC services and design customers that want to devel- designs include LMDS/MVDS, exactly matched our needs, but presence. op custom-designed integrated Satellite communications, also because of the quick circuits for higher frequency Customers, while contracting Passive millimetre-wave imag- response of their experienced applications." with TriQuint, will have access ing and EW(ESM). local and international teams." to, and be supported by TriQuint is establishing a "This strategically important Graham Muir, Telecom Business QinetiQ's Monolithic worldwide network of inde- collaboration allows both Unit Manager Unaxis added, Microwave pendent, authorised Design QinetiQ's and TriQuint's "White laser technology will (MMIC) design team. TriQuint Centres to support its GaAs commercial customers to revolutionize high definition will then move the design into Foundry Services and this access an extremely attractive projection displays for home production, providing wafer offers a wide variety of GaAs combination of a leading entertainment. Unaxis manufacturing and IC testing semiconductor technologies design capability and a leading Semiconductors is very pleased services. including E/D MesFET, pHEMT, production facility," added to be the vendor of choice to VPIN, and HFET. "This agreement is significant Dave Bannister, QinetiQ's supply this exciting technology in that it now provides our QinetiQ offers Microwave Technical Applications and to contribute to Highlink's European customers with a and Millimetre-wave design Manager (MMICs). continuing success."

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ATMI to quit GaAs business on grim AXT, Inc. Q3 figures announces preliminary ATMI, Inc. has reported rev- equipment orders were either Officer of Nanovation enues of $52.1 million and, pushed out or cancelled at the Technologies, has joined ATMI third quarter including a previously last minute." as Senior Vice President and announced asset impairment General Manager of its Epitaxial results "Given this shift, we rigorously charge, a loss of $0.84 per Services business based in reviewed our product portfolio share for the quarter ended Phoenix, Arizona. and cost position. In order to AXT will record revenue for September 30, 2002. This com- the third quarter of approxi- give our gallium arsenide busi- "Bob fulfills a key attribute pares to the third quarter 2001 mately $14.9 million, below ness a better chance to suc- we were looking for - the loss per share of $0.30, inclu- its previous guidance of $20.0 ceed, we have signed a Letter of proven ability to sell novel sive of certain special charges. Intent to contribute those to $20.5 million as a result Excluding special charges, the business models and assets to a venture that will be of weaker than expected third quarter 2002 loss was outsourcing strategies to cus- positioned as a global, low-cost demandfor substrates and $0.10 per share, as compared tomers and partners," said producer, with leading-edge EEDs. Substrate revenue to a $0.21 loss per share in the Doug Neugold, ATMI President. technology.We expect to will be approximately third quarter of 2001. Revenues "Because our Epi Services announce details of the venture $11.7 million and opto-elec- increased 31% over the year- unit historically has fulfilled soon, but with or without this tronics revenue will be ago period, but declined 10% primarily telecomm related transaction, it is appropriate to approximately $3.2 million. from the second quarter of orders, it has experienced a reflect the impaired value of The company is in the process 2002. severe drop in business. Bob's the assets now." expertise and outside-in per- of reviewing the recoverability The special charge recognized Doug Neugold, President, said, spective - and his track record of the long-lived assets at the this quarter was taken to reflect "Concurrent with our strategic of improving financial per- LED division and expects to the impaired value of ATMI's repositioning, we have made formance - will be put to take an impairment charge for gallium arsenide epitaxial serv- substantial progress in extend- good use as he takes a fresh these assets in the third quar- ices business.The amount of ing our core materials business look at our Epi Services ter ended September 30, this charge is $34.6 million, or during the quarter.ATMI is business models." 2002. The current book value $22.0 million after tax. For the presently well-positioned in sev- of the assets under review is nine-month period ended Bob Chaney said, "The sector is eral processes, most notably $26.8 million. September 30, 2002, revenues chemical vapor deposition, ion feeling the impact of the were $158.2 million, and the Net loss for the quarter before implant, and photolithography painful downturn in the wire- loss per share was $0.97. impairment charges will be strip materials.We expect that less and telecommunications Revenues were down 8'/,, com- approximately $5.9 million or electrochemical deposition of marketplaces.We need to pared to $172.0 million in the $0.26 per share. copper will be of major impor- rethink our entire strategy same period in 2001, when around silicon and gallium tance going forward.ATMl is AXT designs, develops, manu- ATMI lost $0.17 per share. creating a "process efficiency arsenide epitaxial outsoureing. Before special items, the loss factures and markets high-per- package" for electrochemical ATMI's Epitaxial Services busi- per share was $0.23 for the first formance compound semicon- copper process technology that ness has a track record of high nine months of 2002, as com- ductor substrates for the fiber we believe will make us a mar- performance at competitive pared to $0.06 profit per share optics and communications ket leader. In addition to our prices for its customers.As our in the first nine months of industries.The Company's pro- CuChem(TM) analytical product customers' end-user demand 2001. prietary Vertical Gradient and NOWPak(R) packaging for increases, we will be in the Freeze (VGF) crystal growth Gene Banucci,ATMI's Chief electrochemical materials, we position that will best facilitate technology produces low- Executive Officer, said, "The purchased Microbar's copper serving their customers." defect, semi-insulating and semiconductor industry turned delivery and abatement product Before joining ATMI, Bob Chan- semi-conducting gallium down suddenly during the third lines during the quarter.\Ve also ey was President and Chief arsenide, indium phosphide quarter, led by double-digit announced a strategic partner- Executive Officer of Nanovation and germanium substrates. wafer start declines at the major ship with Metara on third gen- AXT also is a leading producer tbundries.This rapid change in eration analytical tools, and Technologies, a 165-employee direction - along with an appar- expect to shortly enter the cop- optical networking product and of light-emitting diodes ent channel build-up in our per electroplating materials services foundry with such cus- (LEDs), such as blue, green, SDS(R) Gas Source product line market. tomers as Lucent and Motorola. and cyan LEDs for the display He is a graduate of Purdue and lighting industries and - caused a major perturbation in revenues 1or the quarter.Just Bob Chanet joins ATMI's University's School of edge-emitting and vertical-cavi- as importantly, the wafer start epitaxial services unit Technology with a Bachelor of ty surface emitting lasers slowdown delivered a jolt to Bob Chancy, the former Science degree in Electrical (VCSELs) for the fiber optics industry expectations, and President and Chief Executive Engineering. industry.

III-Vs REVIEW £ ~ £~ { ': ~ :,;i'2,~L~C';O~ ~t£6 :,.}~! ~, VOL 15 - NO 9 - NOV/DEC 2002 News Update Markets & Business

RFMD acquires Resonext to boost presence in 802.11 market

RF Micro Devices, Inc.is to pur- access controller (MAC). a trailing 20-trading day average design multi-mode products chase Resonext Communica- Additionally, we expect the price). The minimum number integrating WLAN and handset tions, Inc., a privately held com- acquisition to accelerate our of shares to be issued by RFMD functionality. Manufacturers of pany providing complete, high- roadmap to a/b/g multi-band will be 14.0 miUion (equivalent handheld devices seek lower ly integrated CMOS WLAN solu- chipsets and provide us with to $9.50 per share) and the power consumption and tions for 802.1 la and multi- key technologies for the devel- maximum number of shares reduced bill-of-material (BOM) band (802.1 la/b/g) platforms. opment of emerging multi- will be 22.2 million (equivalent costs, both of which are mode applications for handsets to $6 per share).The transac- enabled by the higher levels of The acquisition of Resonext and other markets.We expect tion is subject to the approval integration of Resonext's CMOS would significantly expand these strengths, when com- of Resonext's shareholders and product offerings. RFMD's total addressable mar- bined with our current compet- other closing conditions and is ket, complement the In addition to innovative prod- itive advantages in WLAN and expected to close during Company's growing presence ucts and a growing customer our advanced PA capabilities, RFMD's current fiscal quarter in 802.1 lb products and lever- base, Resonext provides RF will enable RFMD to continue ending December 31,2002. age the Company's expertise in Micro Devices the systems and to grow share in 802.1 lb and RFMD anticipates Resonext will multi-standard power amplifiers software expertise and quicMy build a foothold in have a cash balance of approxi- (PAs). Resonext's product port- advanced modeling expertise in the 802.1 la and multi-band mately $30 million at the time folio focuses on 802.1 la and RF CMOS technology. markets." emerging multi-band WLAN of the closing, and the transac- Accordingly, Resonext's product tion is expected to be accretive technologies (802.11 a/b/g). David Tahmassebi, president line is expected to benefit from on a GAAP basis within 12 Recently, Resonext announced and chief executive officer of RFMD's strategic relationships months of closing. RFMD the production of its first Resonext, said, "We're excited with suppliers for low cost, expects to incur one-time 802.1 la chipset and the intro- about the strategic and cultural high-volume silicon manufactur- acquisition charges and subse- duction of a multi-band chipset fits of this transaction. RFMD is ing. On September 30, 2002, quent amortization expenses for 802.11 a/b/g applications. a proven supplier in the hand- RFMD announced a strategic The 802.1 la/b/g chipset con- set and WLAN markets with related to the transaction, and relationship for silicon manu- sists of two chips: a dual-band world-class design and manu- the Company will detail these facturing and development CMOS radio and a multi-proto- facturing capabilities.We see expenses upon closing. with Jazz Semiconductor. Under col baseband/MAC chip. RF immediate synergy with RF Micro Devices began vol- the arrangement, RFMD will Micro Devices currently has a RFMD's 802.1 lb product offer- ume shipments of 802.11 b obtain a guaranteed, lower cost complementary offering of ings and their proven expertise components in the March 2002 source of supply for wafers fab- radio and baseband compo- in multi-standard power anapli- quarter. Since then, the ricated utilizing Jazz Semiconductor's manufacturing nents for 802.11 b applications. tiers. We look forward to Company has achieved the processes, including silicon ger- Industry analysts forecast the expanding our product portfo- number two market position in integrated circuits mar- lio and customer base in the manium (SiGe), bipolar comple- transceivers and has grown ket will grow to more than $1 near-term, and we believe our mentary metal oxide semicon- WLAN revenues to an annual- billion in 2006 and will be com- unique technology and com- ductor (BiCMOS) and RF ized run rate exceeding $30 prised of an increasing percent- bined product roadmaps will CMOS. million. age of 802.1 la and multi-band position RFMD to become the Resonext employs over 90 peo- products. leading provider of WLAN RF Micro Devices estimates its ple, including 70 engineers - chipsets." WLAN transceivers, which are a Jerry Neal, executive vice presi- 90% of whom hold advanced primary component of the dent of marketing and strategic RFMD has agreed to issue $133 degrees.The company has filed Company's flexible product development, said, "Our goal is million in stock, subject to a 23 advanced wireless technolo- offerings, are currently included to become the leading provider collar on RFMD's stock price of gy patents and its flagship in greater than 20% of WLAN ofWLAN chipsets.We surveyed between $6.00 and $9.50 per product, the RN5200 chipset devices. The company intends the WIAN market and did not share, for all the outstanding family, was chosen as the "RF to leverage this customer base find a company more comple- shares of capital stock of Product of the Month" by the and flexible business model to mentary to ours than Resonext. Resonext, including the shares editors of RF Design magazine accelerate the market accept- The acquisition would bolster issuable upon exercise of out- in January, 2002.The Company ance of Resonext's innovative our presence in the 802.11b standing warrants and employ- has several design wins for the products. market and increase our ee stock options.The number RF5200 chipset and its cus- total addressable market to of shares to be issued by RFMD Additionally, RFMD plans to uti- tomers include Taiyo Yuden, include 802.1 la and dual-band will be determined when the lize the technology and engi- a $1.3 billion component offerings, as well as a media transaction is closed (based on neering resources acquired to manufacturer.

l ll-Vs R EVI EW ~ ! At;,VA ;~ '~'~ ',~ ' ~ ~. ~ f: ;~ ~ ;~i ~ VOL a5 - NO 9 - NOV/DEC 2002 Markets & Business News Update

Nokia sales growth returns

Nokia's third-quarter results Europe and followed by the manufacturers and operators Solid 4Q sales outlook were greatly encouraging, mark- Americas.GSM continues to be are completing interoperability Sales for the Nokia Group ing a return to top-line growth the largest cellular standard testing. in the fourth quarter 2002 with pro forma earnings per globally, with nearly 75% of all are anticipated to grow by The company expectsthat wire- share at ~ 0.18, ahead of earlier new mobile subscribers in 2-5% year on year and to less wideband technology will guidance. 2002 so far estimated to be be in the range of C 8.9 billion become vital for capacity, speed GSM users. In mobile phones, pro forma and quality of service, as the to C 9.2 billion. Growth operating profit rose by an out- Compelling new services industry moves forward at full is being primarily driven standing 25%, compared with and phone features are speed. by increasing volume the third quarter last year, with increasingly moving both deliveries of the company's Sales for Nokia Mobile Phones margins exceeding expecta- business people and con- very strong product range grew a healthy 7% year on tions at a very healthy 22.2%. sumers from a very large exist- in mobile phones. Nokia year to g 5.6 billion, reflecting According to Nokia, the hand- ing subscriber base to upgrade Networks sales estimates strong growth in Europe set market is entering a new their phones, or even look include recognition of dual- and continued growth in growth period spurred by the towards owning more than mode GSM/WCDMA network Asia Pacific, partially offset arrival of an increasing number one device. revenue, assuming the neces- by lower sales in the Americas. of mass volume products with sary technology milestones are The mobile network infrastruc- In Nokia Networks, sales color and multimedia messag- satisfied. ing capability. Current visibility ture market remains challeng- showed a decline of 7%, com- Nokia's profitability outlook suggests overall market volume ing with continued low invest- pared with the third quarter remains very strong, for 2002 will reach Nokia's ear- ments. However, Nokia has 2001, reflecting lower-than- reflecting the company's lier expectations of 400 million seen significant progress in the expected GSM network invest- units sold.All regions are esti- third-generation WCDMA roll- ments in Europe and Asia execution and operational mated to show growth of at out. Pre-commercial network Pacific, while growth in the efficiencies and strong least 5%, led by Asia Pacific and launches are underway and US continued. product mix.

Anadigics announces Q3 reports and gloomy Q4 outlook

Anadigics, Inc. has reported net Wireless revenues in the "Anadigics is successfully culti- revenues in the mid-2003 time sales of $21.3 million and a loss quarter were $11.0 million, vating new customers and frame, as customers ramp to per share of $0.46 (GAAP basis) reflecting an increase of $4.9 expanding existing relation- production volumes." for the third quarter ended million or 80% over the prior ships to achieve significant mar- The Company's balance sheet September 28, 2002.After year. CDMA revenue grew $7.5 ket share gains," remarked Dr. remains very strong as cash and adjusting the loss to exclude million versus last year reflect- Bami Bastani, President and marketable securities totaled special charges and gains, as ing an expanded customer Chief Executive Officer of $156.5 million at September well as acquisition accounting, base and increased market Anadigics. "Our recent success- 28, 2002. Cash and marketable the loss per share was $0.33 for share gain in CDMA. es include new handset design securities, net of long-term bor- the quarter.As previously Sequentially, Wireless revenues wins in China, Korea, and rowings, was $89.8 million, a reported on September 23, were down $2.1 million, Taiwan.We are currently $5.0 million improvement over 2002, the Company has record- which was partially due to engaged in the design-in phase the second quarter 2002. ed special charges during the lower ASPs and declining with more than 25 handset The Company estimates that quarter totaling $16.0 million TDMA revenue. Revenues in OEM/ODM customers, includ- fourth quarter 2002 revenue (the previous range was $15 to Broadband were $10.3 million, ing tier one manufacturers, for will approximate $19 to $20 $17 million), with non-cash flat from last year and the greater than 50 wireless hand- million, reflecting flat sales in charges representing $13.6 mil- prior quarter; however, cable set platforms.This success is Wireless and lower Broadband lion.These special charges were settop box and cable infra- due to the industry leading per- revenues.The EPS loss is esti- partially offset by a $12.6 mil- structure IC sales increased formance and reliability of our mated to improve by $0.05 to lion gain on the repurchase and $1.0 million over the InGaP PA products.We antici- $0.07 over the third quarter to retirement of a portion of its prior year and $0.7 million pate these activities to con- approximately $0.26 to $0.28 debt. sequentially. tribute significantly to Wireless per share.

III-Vs REVI EW s:, ~ ~ , ~ ~ ~, ~ ~ VOL ~5 - NO 9 - NOV/DEC 2002 Markets & Business

RFMD reports record results

RF Micro Devices, Inc.has of $1.5 nlillion, or $0.01 per POLARIS TM TOTAL RADIO TM Dean Priddy, CFO and vice reported financial results for its diluted share, lbr the second transceiver into these markets. president of administration, fiscal 2003 second quarter, quarter of fiscal 2002, based on stated, "We're pleased to have "WLAN revenues grew 35.4% ended September 30, 2002. a 14% tax rate.This compares exceeded our revised from the previous quarter, and Revenues for the quarter werc sequentially to net income of September guidance for rev- we estimate our WLAN compo- approximately $119.7 million, a $2.3 million, or $0.01 per share enues and earnings per share, nents are currently included in sequential increase of approxi- for the first quarter of fiscal driven by increased demand greater than 20% of all WLAN mately 15.2% versus revenues 2003, based on a 1.6% tax rate. as we exited the September devices.While we've achieved of $103.9 million for the quar- quarter. The Company is currently fully the number two position in ter ended June 30, 2002 and an booked tbr the December 2002 802.11 b transceivers, our "Given our strong September increase of approximately quarter and currently antici- longer term goal is to be the revenue growth, we were able 21.8% versus revenues of $98.3 pates revenues of approximate- leading supplier of WLAN to increase operating income million for the corresponding ly $128 million to $132 million chipsets.To that end, we by 300 basis points.We contin- quarter of fiscal 2002. Revenues and earnings per share of announced separately today ue to take market share in our and earnings per share exceed- approximately $0.04 to $0.05, our agreement to acquire core business, and we're more ed the Company's most recent before the impact of the pro- Resonext Communications, Inc. focused than ever on reducing estimates, provided on posed acquisition of Resonext Resonext has assembled a costs. Additionally, we are mak- September 24, 2002, of approxi- (reported elsewhere in this world-class team focusing on ing significant investments in mately $118 million in rev- issue). the 802.1 la and multi-band our future that we believe enues and earnings per share of segments of the WLAN market, improve our earnings potential David Norbury, CEO of RF approximately $0.03, primarily and we expect their capabili- going forward. This quarter, we Micro Devices, said, "Our as a rcsult of increased demand ties will complement our are releasing extremely small, growth was driven primarily by in the final week of the quarter. 802.1 lb products and signifi- highly integrated PA modules market share gains and diversi- Gross profit for the quarter cantly increase our total that reduce our cost structure. fication efforts.The introduc- increased 11.0% sequentially to addressable market.We further In the March quarter, we plan tion of new, highly integrated $46.0 million, versus $41.4 mil- believe Resonext will help us to begin 6" GaAs HBT produc- power amplifier (PA) modules lion for the quarter ended June accelerate to market an a/b/g tion, which wc expect will fur- accelerated our growth in GSM 30, 2002 and increased 26.5%, multi-band chipset, and we ther reduce our cost structure. and CDMA PAs and helped to versus $36.4 million for the expect our strategic relation- Additionally, our technical team increase our sales to original has identified techniques we prior year period.The year-over- ship with Jazz Semiconductor equipment manufacturers will give us a distinct cost believe will improve our test year and sequential increases in (OEMs), original design manu- advantage in the WLAN market. yields by several points. On the gross profit were primarily facturers (ODMs) and contract design side, we continue to attributable to the increase in "Looking forward, the response manufacturers. push for higher levels of inte- the Company's revenues. to our POLARISTM transceiver gration and are developing "Even as sales to our largest continues to be very strong Other operating expenses in innovative low-cost packages customer increased in absolute from ODM and OEM cus- the September quarter totaled that have IP protection. Finally, dollars in the September quar- tomers, as well as from base- $0.6 million and were related the cost advantage we've nego- ter, sales to all other customers band providers. We've mated to startup costs associated with tiated through our Jazz rela- increased as a percentage to POLARIS TM tO the handset base- the Company's Beijing facility. tionship reduces our cost of sil- more than half of revenues. bands of three leading commu- The Beijing facility became icon components and will Sales to our second largest cus- nications companies, and we operational in the September improve overall profitability tomer grew substantially, and anticipate similar announce- quarter and, subsequently, oper- as we transition manufacturing the world's third largest hand- ments in the near future. Our ating costs associated with the to Jazz. set manufacturer firmly strategy of partnering with the Beijing facility were moved remained our third largest cus- world's leading baseband sup- "The success we're seeing in from other operating expenses tomer. Beyond OEMs, we saw pliers reflects our customers' our core business allows us to to cost of goods sold. continued strength from ODMs requests for a best-of-breed continue making investments in Approximately $0.3 million of and contract manufacturers handset solution and signifi- multiple growing markets, operating expenses associated who combine our components cantly increases our competi- including handset transceivers, with the Beijing facility appear with reference designs from tive position in the handset wireless LAN, , GPS, in cost of goods sold in the industry leaders to achieve component market. We believe and advanced technologies like September quarter. best-of-breed solutions.We these achievements, combined gallium nitride.We remain con- Net income for the quarter was believe our gains among OEMs, with our ongoing diversifica- vinced of the future of wireless $6.5 million, or $0.04 per dilut- ODMs and contract manufactur- tion efforts, position us to con- markets and believe our strate- ed share, based on a 0.5% tax ers increased our PA leadership tinue to grow in excess of our gy gives us a high likelihood of rate, compared to net income and give us leverage to sell our core handset market." Success,"

III-V$ REVIEW +~!~ ,q;~,:~(: 0 .~,~;~+i~O~;:i:~; ~ ;,,'~;~i,;, ~-~+~VOL $5 - NO 9" NOV/DEC 2002 Markets & Business News Update

Celeritek reports modest Q2 revenue growth

Celeritek has reported financial reductions is expected to be a new sales and technical sup- of Celeritek. "The local office results for its second quarter of approximately $2.7 million.The port office in Korea to further will provide our customers fiscal 2003 ended September savings are reflected in the strengthen our efforts in the with the level of support they 30, 2002. Revenues were $15.5 financial outlook for the third Asia-Pacific region. In the sec- deserve." million, compared with rev- quarter of fiscal 2003. ond quarter, semiconductor rev- The Company also announced enues of $15.3 million in the "We are working to ensure that enue from Korea for power first fiscal quarter of 2003 and our business is right-sized for amplifier modules for both cel- separately today that it has $15.1 million for the second current market conditions, lular and Korean PCS platforms signed a definitive agreement quarter of fiscal 2002.The net while moving forward with the increased to over 8% of our to acquire Tavanza Inc., a pri- loss for the second quarter of strategic initiatives that will semiconductor revenue," com- vately held, fabless designer of fiscal 2003 was $1.2 million or support our growth. During the mented Tamer Husseini, presi- power amplifier modules and $0.10 per share, compared second quarter we announced dent and chief executive officer components (see page 14). with a net loss of $2.7 million or $0.23 per share for the same period a year ago.

For the first six months of fiscal 2003, revenues were $30.8 mil- lion compared to $29.1 million for the first six months of fiscal 2002.The net loss for the six- month period was $2.4 million or $0.20 per share versus a loss of $7.8 million or $0.65 per share for the comparable peri- od last year.

Semiconductor sales were $11.4 million in the second quarter of fiscal 2003, up 21% from $9.4 million in the first fiscal quarter of 2003 and com- pared to $9.1 million in the second quarter of the previous year.The increased semicon- ductor revenue was the result of increased shipments of power amplifier modules. Subsystem sales in the second Look to ATMI GaN to be your partner in developing quarter of fiscal 2003 were and manufacturing advanced semiconductor devices. $4.1 million, compared to $5.9 million in the first quarter of ATMI GaN Substrates -- improve epitaxy quality, fiscal 2003 and $6.0 million in ease the processing of devices and enhance device the corresponding quarter of performance. the previous year. ATMI GaN Epitaxy -- realize optimal device Gross margin for the quarter was on plan at 25%. Included in performance with our epitaxy on GaN, SiC or Sapphire selling, general and administra- substrates. tive expenses was approxi- mately $500,000 in expenses related to the Anaren proposal. ATMI GaN... Growing your future. The Company further reduced headcount in the second fiscal quarter resulting in approxi- mately $200,000 of termination 7 Commerce Drive Tel: 203.794.1100 : w~'.atmi.com Danbury, CT 06810 Fax: 203.830.2123 [email protected] expense in cost of sales and 4 ATMI research and development.The annual savings from these

III-Vs REVIEW ~ ~;:,L.i:~ VOL15 - NO 9 - NOV/DEC 2oo2 News Update Markets & Business

Aixtron heralds 8-inch era for GaAs Celeritek to MOCVD processes for multi- during this development pro- the field of high frequency buy wafer 8-inch GaAs substrates gramme demonstrate an excel- electronics" says Dr. Bernd have been demonstrated by lent scalability of the existing Schulte, Executive Vice Tavanza researchers at Aixtron. Based on 4-inch and 6-inch processes to President and COO of Aixtron. extensive numerical modeling, 8-inch. Uniformities at 1% "The continuous efforts of the Celeritek, Inc.has signed a the existing AIX 2600 G3 reac- across the entire &inch wafer Compound Semiconductor definitive agreement to acquire tor, was upscaled in order to could be achieved immediate- Industry to increase its pro- Tavanza Inc., a privately held, allow multiple &inch growth. ly. Even at this early stage, teh ductivity will require larger fabless designer of power The novel reactor's &inch capa- company reports that material substrates.Thus we decided to amplifier modules and compo- quality and homogeneity do bilities were demonstrated by develop an MOCVD tool for 8- nents for cellular and wireless not differ from results growing GaAs and AIGaAs inch wafer size as early as pos- LAN products.Terms of the obtained on the well estab- structures.As substrates, &inch sible." Already several AIX agreement have not been lished 6-inch systems. GaAs wafers from the 2600G3 systems have been disclosed. Freiberger Compound Materials installed at customers for the "We are convinced that &inch Tamer Husseini, president and GmbH were used. production of SiGe epi struc- will soon become the new chief executive officer of tures, using multiple 8-inch Aixtron reports that the standard for high volume Celeritek,commented "In addi- process results obtained manufacturing, especially in substrates. tion to innovative chip design, which should begin contribut- ing to our revenue in the sec- Finisar cuts losses and sells Sensors Unlimited ond half of fiscal 2004,Tavanza has developed cost effective Finisar has agreed to sell cer- will license intellectual proper- Finisar purchased Sensors packaging techniques that will tain assets and transfer certain ty associated with the develop- Unlimited in October 2000.The allow Celeritek to achieve its liabilities of its Sensors ment of cameras and photodi- original business of the compa- goal of lowest cost producer Unlimited subsidiary to a new ny was based on InGaAs photo- ode arrays for military and of power amplifier modules. company formed by Sensors' diode arrays, cameras, and sens- industrial spectroscopy appli- The Tavanza acquisition will current management group, for ing, mostly for spectroscopy in cations.The new company will leverage Celeritek's 802.1 la $6. l million in cash. industrial and military applica- assume the name "Sensors WLAN product development tions.According to Greg Olsen, Finisar will retain ownership Unlimited" and continue to strategy by providing the President of the new company, of all of Sensors' intellectual operate at Sensors' existing CMOS design expertise neces- "This transaction will allow us property and will transfer all facility in Princeton, NJ.The sary to develop integrated to return to our roots and refo- manufacturing and develop- new company will also assume multi-band 802.11 a/b/g front cus on our core strengths." ment activities for positive- the obligations associated with end modules." intrinsic-negative (PIN) diodes the equipment and facilities Finisar will record a loss of Tavanza's innovative technolo- and avalanche photodiodes located there. In addition, approximately $39 million on gy will enable Celeritek to bet- (APDs) to other facilities with- Finisar will retain a minority" the sale of these assets and the ter respond to the growing de- in Finisar.The new company interest in the new company. transfer of associated liabilities. mand for high performance, power efficient, small volume, cost effective power amplifiers Ericsson Q3 results and market view for handsets and WLAN prod- Ericsson has been concentrat- the lower end of its 175 - 215 quarter. Ite had previously esti- ucts.Already, Tavanza has sam- ing its efforts on reducing oper- million forecast. mated 85 million units for the pled CDMA power amplifiers second quarter.The full-year to several Korean cell phone ating expenditure as it reports Ericsson anticipates that the market estimate is about 390 makers. As previously thrid quarter sales of SEK20.5 market in 2003 will not decline million units. announced in September, billion, down 46% from the fig- as much as this year, and will ures for the same period last Celeritek has opened an office begin to stabilize at a lower In the third quarter the compa- year. Despite the disappoint- in Korea to better serve this level.A moderate increase in ny's operating expense annual ments of the current market, growing market. 3G sales should partly compen- run rate excluding restructur- the company sees room for sate for the lower demand for ing costs was reduced by SEK 5 The acquisition has been app- optimism. mature technologies such as billion, to SEK 52 billion.At the roved by the board of directors TDMA and PDC. Ericsson estimates that more end of the quarter there were of each company and is subject than 45 million new sub- Ericsson believes that approxi- 71,700 employees, a workforce to customary closing condi- scribers were added worldwide mately 92 million mobile reduction of 4,500 employees tions. Celeritek expects the during the third quarter.At this phones were shipped in the during the quarter.The number acquisition to bc completed in rate, it expects net subscriber second quarter and approxi- is expected to be less than the fourth calendar quarter of additions this year to be toward mately 100 million in the third 60,000 by the end of 2003. 2002.

III-Vs REVIEW TH~ ~!~ ~,>¢~;<;; ~;:d;:Tt~.:'~t,~<7;g; ~ ~¢i~J~M VOL ~5" NO 9" NOV/DEC 2002