* RF Micro, Skyworks to benefit as more LTE chips used in
* Investors favor chipmakers with exposure to Samsung
By Sayantani Ghosh and Sruthi Ramakrishnan
March 15 Radio frequency chip makers are set to
gain as Samsung Electronics Co Ltd and Apple Inc
unveil ever more sophisticated smartphones and tablets
to battle for the No. 1 spot in the global mobile devices
Investors and analysts say they like shares of RF Micro
Devices Inc, Skyworks Solutions Inc and Avago
Technologies Ltd - companies that make the chips that
enable gadgets to send and receive data wirelessly.
Samsung unveiled its latest flagship phone, the Galaxy S4,
in New York on Thursday. The S4 can stop and start videos when
someone looks at the screen, flip between songs at the wave of a
hand and record sound to accompany pictures.
As manufacturers improve and add new features to phones,
which are increasingly used to stream music, video and games,
they are boosting the RF chip technology used in the devices.
"The RF content in handsets continues to go up," said
Stewart Stecker, a portfolio manager at AlphaOne Capital.
"That's good from an immediate to longer-term perspective for
the entire RF supply chain."
The importance of RF chips will increase as network
operators deploy high-speed wireless technology known as 4G LTE
(long-term evolution), analysts said.
LTE requires a much higher number of frequency bands, which
increases the number of RF chips in a phone.
The global LTE market is expected to almost double this
year, surpassing the $10 billion mark, according to a March 13
report from telecom market research firm Infonetics Research.
"As you add LTE - that's a whole other frequency - you need
more radio, more RF equipment," said Northland Securities
analyst Tom Sepenzis.
A Verizon customer, for example, using a Samsung Galaxy S4
while traveling the world, would need to be able to use the LTE
network in the United States and other countries, said Sepenzis.
"That requires more complex amplifiers that can handle
multiple frequencies, requires better antenna solutions,
switching capability to handle all the different frequencies.
That obviously favors the RF component manufacturers," he said.
Within the RF chip supplier group, analysts said those that
have diversified their client base by supplying to Samsung,
Apple, and other smartphone vendors such as China's ZTE Corp
are best placed to take advantage of
After chipping away for years at Apple's market share,
Samsung emerged as the No. 1 seller of smartphones last year,
undercutting its main competitor with cheaper handsets and a
wide range of products.
Samsung sold 64.5 million smartphones in the fourth quarter
of 2012, compared with 43.5 million iPhones sold by Apple, data
from market research company Gartner shows.
Greensboro, North Carolina-based RF Micro receives about a
quarter of its revenue from Samsung, up from 10 percent a year
ago, data compiled by analysts showed. Orders from Apple account
for a fifth of sales, they said. RF Micro declined to comment.
Power amplifier maker Skyworks relies on Samsung and Apple
for about a quarter each of its revenue, analysts said. Skyworks
was not available for comment.
T. Rowe Price Global Technology fund portfolio manager Josh
Spencer said he likes Avago Technologies Ltd.
"Avago has some very high-end filtering technology that you
have to have in the smartphone antennas," Spencer said, adding
that he was also considering buying RF Micro's stock.
Shares of RF Micro and Skyworks gained 15 percent and 21
percent respectively from the beginning of the year until Feb.
21, when the upward trend was interrupted by Qualcomm Inc's
unveiling of plans to make its own RF chip.
But both stocks recovered a day later after analysts said it
was unlikely that Qualcomm would risk damaging integrated
circuit partnerships to seek a profit opportunity of not more
than $600 million.
Qualcomm has nearly half of the global market for "baseband"
chips, which connect mobile phones to cellular networks, and
therefore is also set to benefit from rapid LTE growth.
The S4 will use Samsung's application processor in some
regions and Qualcomm's Snapdragon chips, which have LTE
features, in others.
"Qualcomm has such dominance in the baseband market that
they have pricing leverage even against big customers," Spencer