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TriQuint CFO: Hillsboro factory likely secure into 2017, perhaps indefinitely [The Oregonian, Portland, Ore. :: ]
[September 05, 2014]

TriQuint CFO: Hillsboro factory likely secure into 2017, perhaps indefinitely [The Oregonian, Portland, Ore. :: ]


(Oregonian (Portland, OR) Via Acquire Media NewsEdge) Sept. 05--Shareholders in TriQuint Semiconductor and RF Micro Devices gave overwhelming approval Friday to the companies' $7 billion combination, the biggest deal in the history of Oregon tech.



The agreement blends TriQuint, which employs about 1,000 at its Hillsboro chip plant and headquarters, with RFMD, a North Carolina rival. The combination creates a big new company that makes computer chips for communications-networking equipment, the iPhone and similar smartphones and other wireless technologies.

TriQuint chief financial officer Steve Buhaly, who will be the top-ranking Oregon executive at the combined company, said Friday that key decisions about the business -- including the fate of its chip factory in Hillsboro -- won't be made until the deal closes sometime this fall.


And while the new company will have excess manufacturing capacity, Buhaly said the process of shifting product lines from one factory to another means that there won't be dramatic changes for some time.

"There'd a be a substantial evaluation process that needs to go on and the timing of any closure would be two to three years from now," he said.

RFMD chief executive Bob Bruggeworth will run the new company, which hasn't identified its name yet (though trademark filings give some strong hints) or the location of its headquarters.

"We're not going to decide a headquarters for quite a while -- maybe never, I don't know," Buhaly said.

With operations spread over sites in North Carolina, Oregon, Texas, Florida, California and parts of Asia, Buhaly said the company feels no compelling need to identify a single central office.

TriQuint and RFMD shareholders will each split ownership of the new company equally. The combination will create 600,000 shares, but Buhaly said the businesses plan a "reverse split" once the deal is complete -- reducing that to 150,000 shares. So at today's share prices, that puts the new company's stock somewhere north of $40 a share.

The deal still faces one regulatory hurdle: Approval from the Chinese Ministry of Commerce, which conducts an antitrust review similar to those run by the U.S. Department of Justice.

"It's a rather opaque process. They don't make commitments," Buhaly said. But he said they've had no indication that China will seek modifications to the deal, so Buhaly said he expects the transaction will close in October or November.

Then begins a roughly three-month process to decide whether the new company might close its Hillsboro factory or a similar RFMD facility in North Carolina.

"We'll be comparing the costs of both plants: What's it cost to produce a wafer, a part, what have you?" Buhaly said.

And the company will look at what each plant produces, he said -- "The performance of products you can build from those processes are different." While a decision on closures could come as soon as this year, chip production is a delicate business and it's not easy to move product lines from one facility to another. It will take time to qualify customers' products for production in a new factory, and Buhaly said that's why the plant will continue operating for some time even after its fate has been decided.

Even then, he said, it's conceivable that growing demand could cause the company to revisit any closure decision, perhaps retaining one facility to handle a growing workload.

TriQuint's sales are up more than 9 percent through the first six months of the year, and its gross profit margin has climbed from 26 percent at the end of 2013 to 40 percent in its most recent quarter.

That improvement, and similar gains at RFMD, have driven each company's share price up more than 120 percent since they announced the deal in February. RFMD shares climbed another 1.7 percent Friday; TriQuint was up 2.1 percent.

As the wireless industry shifts to faster 4G data networks, Buhaly said customers are demanding more from the wireless filters that RFMD and TriQuint supply -- boosting profit margins.

"4G is driving a more profitable product mix," Buhaly said, "and the market is growing pretty well." -- Mike Rogoway; twitter: @rogoway; 503-294-7699 ___ (c)2014 The Oregonian (Portland, Ore.) Visit The Oregonian (Portland, Ore.) at www.oregonian.com Distributed by MCT Information Services

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