Filtronic plc has announced a definitive agreement for the sale of all of the share capital of Filtronic Compound Semiconductors Limited (FCSL) to RF Micro Devices Inc. (RFMD) for £12.5 million cash. The acquisition price includes the purchase of FCSL’s six-inch GaAs wafer fabrication facility at Newton Aycliffe, UK, which is currently a major supplier of GaAs pHEMT semiconductors to RFMD. The price also includes the purchase of Filtronic Compound Semiconductors' millimeter-wave RF semiconductor business. The transaction is expected to be completed before the end of RFMD’s fourth fiscal quarter, ending in March 2008, subject to customary closing conditions.

The agreement provides for ongoing supply to Filtronic’s point-to-point business for at least three years and for it remaining at its current site. Following completion, Filtronic will cease its activities in compound semiconductor manufacture and supply. FCSL will enter into a supply contract and lease, including provision of support services, to its point-to-point business. The proceeds of the sale will be retained within Filtronic’s general corporate resources.

RFMD expects the addition of FCSL’s high-volume GaAs fab to significantly reduce its GaAs pHEMT sourcing costs and provide additional capacity, thereby providing the company the opportunity to capture incremental revenue that otherwise might be subject to capacity constraints during calendar year 2008.

Bob Bruggeworth, president and chief executive officer of RFMD, said, "The acquisition of Filtronic Compound Semiconductors is expected to increase our manufacturing volume, lower our overall cost structure and provide RFMD with a high-volume supply of GaAs pHEMT, all of which support our aggressive growth expectations for cellular front ends. In addition, we anticipate that Filtronic Compound Semiconductors' strong millimeter-wave business will add profitable, high-margin revenue to our Multi-Market Products Group and enable RFMD to further diversify into new growth markets that leverage our global leadership in RF."