Interview with Jerry Neal, RF Micro Devices

Yesterday, RF Micro Devices announced a deal to sell the firm's Bluetooth assets and division in San Diego to Qualcomm. We spoke with Jerry Neal, Co-founder and Executive Vice President of Strategic Development and Marketing at RF Micro Devices to get the background on the deal and the sale. RF Micro's San Diego group was originally Silicon Wave, and was acquired by RF Micro a couple of years ago. socalTECH's Ben Kuo interviewed Jerry yesterday.

What can you tell us about your Bluetooth group and the deal?

Jerry Neal: The core Bluetooth group was a group we acquired from the company Silicon Wave in 2004. Essentially, RFMD had developed some Bluetooth technology prior to that, and then acquired Silicon Wave. We've had it for about two years, and had built a Bluetooth business, and are retaining the revenues from that business, and are continuing to ship legacy products and support customers. But, we thought the core Bluetooth technology we developed could be utilized better by Qualcomm, because of the new 4000 series chips we developed, which are complete Bluetooth systems-on-a-chip. That chip is about 80% digital, and Qualcomm will be able to integrate that into their baseband. The cost of them designing a Bluetooth solution would be much more competitive than us doing it alone. The main driver in us agreeing to sell these assets to Qualcomm was the fact that we have had a relationship with Qualcomm over the years, starting in 1994, when we first provided a chipset to them--when they were producing their own cell phones. Although we have had this relationship, we're not currently a development partner with Qualcomm. This deal allowed us to become a development partner, and we will now be developing complementary components for Qualcomm's reference designs. Those reference designs will provide lots of opportunity for us to increase our CDMA and wideband CDMA power amplifier business.

So the deal went beyond the sale and also included future designs?

Jerry Neal: What we agreed to is that we will collaborate and work together on complementary products. As you probably know Qualcomm does not have a power amplifier and front end components as part of their portfolio. We're the strongest company in power amplifiers and components for handsets and those kinds of things. This is an opportunity where we can share roadmaps, and work together to make sure our power amplifier front end modules will be best suited for Qualcomm and Qualcomm's customers.

How many people are there in San Diego?

Jerry Neal: What we have are approximately 90 to 100 employees. Qualcomm will be taking approximately 70 of those people. They will not only get the IP, which is the patent portfolio but the know-how and people who have developed the chips. They have the human capital to do whatever they choose to do with it. We are retaining a small group to basically support the existing product.

What are your legacy products, and what is covered there?

Jerry Neal: We have several chips where Bluetooth is involved, including our 3500 which is a total system on a chip Bluetooth part. That went into various applications, including wireless printers and so forth. There is the 1712 and 1721 which is really a product that is the radio section of a Bluetooth that works in conjunction with Qualcomm's baseband. They currently have a specification called BlueCube- these products allow someone like ourselves that have a radio and existing baseband with a total solution. We have been selling those radio components with Qualcomm for some time - we sell direct to customers - but we are approved by Qualcomm to do that.

Why did you decide to sell the unit now?

Jerry Neal: The timing is more to do with that we were making the transition from legacy products to the new EDR - extended data rate components, our line of 4000 chips, that was the latest generation of products, and that there was interest by Qualcomm in those particular products. It's easier, as you would know, to make change before you have a group of customers receiving shipments, we were doing some evaluation of customers on those products that had not yet gone into production. The timing was good from that standpoint. We felt, given Qualcomm's ability to integrate this into their existing portfolio, it was a better solution for customer ultimately. The opportunity was there, and we capitalized on that opportunity.

It seems like there's a trend in the wireless space towards integration, was the deal driven by this trend?

Jerry Neal: That's something we've observed. There is an integration trend on some radio systems. Qualcomm is ahead of many people in their plans in that regard, so this makes a lot of sense to us, and we believe in their strategy.

Thanks for the interview!


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