For first-quarter 2013, RF front-end component maker and foundry services provider TriQuint Semiconductor Inc of Hillsboro, OR, USA has reported revenue of $184.2m, down 15% on $216.7m on a year ago and 21% on $233.6m last quarter. End-market revenue split was 57% Mobile Devices, 28% Network Infrastructure, and 15% Defense & Aerospace. Foxconn Technology Group was the only customer that exceeded 10% of total revenue (specifically 25%).
Network Infrastructure revenue was up 2% sequentially and 8% year-on-year, primarily due to increased optical revenue (up 8% sequentially). Defense & Aerospace revenue was up 32% year-on-year but down 16% sequentially after a very strong last quarter (noting that quarter-to-quarter variations are dependent on program timing, driven mainly by radar applications). Mobile Device revenue fell 30% sequentially to $105.5m (as expected, through the seasonally low demand from the firm's largest customer, although all other top-five mobile customers grew).
On a non-GAAP basis, gross margin was 22.8%, down on 31.7% last quarter and 30.4% a year ago, due to lower revenue and about $5m in charges from a now-resolved quality issue. Excluding this one-time cost, results were in line with guidance.
Driven by increased R&D spending, operating expenses were $68m, up by $1.4m on last quarter and by $6.6m on a year ago.
Net loss was $27.2m ($0.17 per share), compared with net income of $6.2m ($0.04 per share) last quarter and $4.1m ($0.02 per share) a year ago. Despite this, cash and investments rose during the quarter from $139m to $141.1m, due to a lower accounts receivable balance. Capital expenditure was $29.4m, primarily related to capacity expansion for premium filters.
"Our Q1 results, while disappointing, should be our low quarter for 2013," commented president & CEO Ralph Quinsey. "We are well positioned in each of our markets to regain growth and margin momentum."
In RFICs, TriQuint says it experienced healthy design-win traction with its highly efficient MMPAs (multi-band, multi-mode power amplifiers) at several major OEMs (including Samsung, Blackberry and various Chinese manufacturers). "Customers have told us they are migrating to our new TRIUMF MMPA because these modules deliver longer battery life and enable steady operating times versus competitive products," Quinsey commented.
"Besides the MMPA developments, our second focus area is TriConnect Wi-Fi solutions," noted Quinsey. "We have introduced two new 5GHz modules that deliver superior performance in the 802.11ac applications: these new TriConnect modules are shipping at high volume today," he added.
"Third, and frequently underestimated, is the rapidly expanding demand for premium filters," said Quinsey. "These filters are essential in resolving challenges brought on by more bands per phone in crowded RF spectrum. Our premium BAW [bulk acoustic wave] and advanced TC-SAW [temperature-compensated surface acoustic wave] filters [launched during Q1, to support 4G and Wi-Fi coexistence] are designed to meet the toughest filtering requirements for the new LTE bands being deployed... TriQuint is one of a limited number of suppliers worldwide who can solve these tough filtering challenges effectively," Quinsey claimed.
Regarding the Networks infrastructure market, "We have benefited from the 40 gigabit expansion over the last three years, but I expect 40 gigabit demand to peak in 2013 as we begin to ramp our 100 gigabit products," said Quinsey. Also during the quarter, TriQuint launched five new transimpedance amplifiers (TIAs) for the optical market - a new product category for TriQuint that enables the firm to now serve both transmit and receive portions of high-performance optical networks. In addition, TriQuint has secured design wins that should drive solid demand over the next three years at most major OEMs such as Ericsson, Huawei and ZTE. "We also see strong interest from customers in gallium nitride (GaN)," noted Quinsey.
Outlook for Q2 and full-year 2013
For Q2/2013, TriQuint believes that revenue will rise to $185-190m, adding that it is 92% booked to the midpoint of this guidance. On a non-GAAP basis, gross margin is expected to rise to 27-29%, driven by higher factory utilization (as the firm builds inventory in advance of an expected strong second half) and the absence of costs from the Q1 quality issue. Operating expenses are expected to rise slightly to $69m. Net loss is expected to be cut to $0.10-0.12 per share.
"Investors have not yet recognized the value I believe TriQuint represents," Quinsey concluded. "We have a mobile product line built on a foundation of high-performance low-current solutions that now includes premium filters during a time that filter demand is beginning to outpace the overall market growth rates," he added. "I expect strong second-half revenue will improve utilization and push us back into profitability for the full year."
