RF Micro Devices, Inc (NASDAQ:RFMD) – emerging from the Samsung shadow

Posted by Chris Bell June 11, 2013 0 Comment 869 views

The grapevine has it that Samsung Electronics’ Galaxy S4 smartphone sales have been plateauing. Though there is no doubt that the Galaxy S4 has been a hot-seller and is one of the highest-volume devices, some analysts aver that the recent supply-chain checks are an indication that there is a slowdown in demand and that matching the previous unit expectations may prove to be a challenge. So how does RF Micro Devices, Inc (NASDAQ:RFMD) come into the picture?

The Samsung see-saw

The Samsung surprise reports have unleashed a current of uncertainty in a market that depends a lot on the mobile business, the RF market. Companies such as RFMD, SWKS and AVGO are highly-leveraged to the mobile maker and have been feeling the heat as well. The Galaxy S4 slowdown is definitely disconcerting and could have a massive impact on related-component players but this downslide is not an entirely unexpected one. Historically, companies that are tied to the Samsung flagship device tend to experience a ramp a few weeks before a launch, a very strong quarter at the point of launch and then a lull as there is then a work-down in channel inventory.

The changing face of the mobile market

It goes without saying that there will be a slowdown in the demand for the Galaxy S4 once the novelty wears off and newer and more technologically advanced products make an appearance. It somehow seems like the concern around a major volume drop-off is a wee bit exaggerated. If for instance, the reports are actually accurate, the slowdown could also be attributed to the fact that consumers are in wait for a new Apple device or they may even be waiting for the launch of a low-cost device. In that event, RF Micro Devices, Inc (NASDAQ:RFMD), AVGO and SWKS will still come out smiling. All they have to do is align their products to suit other devices.

RF names would have to break out in a sweat only if there is an indication of a drop in mobile device demand which doesn’t really seem to be much of a possibility. And so, as long as people are inseparable from their phones, so also will RF manufactures be inseparable from their mobile-maker business partners.

About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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