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