RF Micro Sees Demand Surge

Investors bid up RF Micro Devices(RFMD) Thursday after a top exec pointed to strong demand for cell phones and solid relationships with key customers.

In a presentation at the Credit Suisse First Boston annual technology conference in Phoenix, finance chief Dean Priddy Jr. outlined a bullish outlook for the next several quarters. Shares of RF Micro rose 5% to $5.96.

"If there's any difference between this year and last year, it's the confidence that we have going into the March quarter," said Priddy. While there is typically a seasonal downturn in handset sales in the March quarter, Priddy said that a couple of RF Micro's customers have already commented that they're expecting a less marked seasonal downturn during the period. "The March quarter is going to be a very strong quarter, not only for the industry but for RF Micro," Priddy said.

One of RF Micro's main drivers of growth will be its Polaris chip, which provides high-speed data transfer functionality to cell phones. According to Priddy, every Polaris chip that ships represents $5 to $7 of content per phone, compared to roughly $1.50 per phone with the standard power amplifier chips the company ships.

"It takes a few million units [of Polaris chip shipments] to make a very substantial difference in our revenue growth for the quarter," said Priddy. In RF Micro's most recently completed quarter, the Polaris chip accounted for 10% of revenue.

And while there were reports that quality issues with earlier versions of the Polaris chip had jeopardized ties between Motorola(MOT) and RF Micro, Priddy used the occasion to try putting those questions to rest. RF Micro will be providing chips in several versions of Motorola's popular Razr phone, he said. "This is a long term relationship," he said. "The relationship is very strong."