TriQuint Newsletter

Electronic News, May 6, 2002

A REPORT FROM TRIQUINT SEMICONDUCTOR

May 6, 2002

VOLUME 2, ISSUE 53

TriQuint Semiconductor First Quarter Earnings Release

Our book to bill ratio was .95. We are pleased with positive market trends in wireless phones, base stations, WLAN, and military, but are waiting in point-to-point, satellite, and particularly optical. Revenues for the first quarter were $62.4M. Gross margin for the fourth quarter of 33.8% is due to lower factory utilization. Operating expenses totaled $23.9 million for the quarter. Pro forma operating income improved by over $500,000 compared to Q4 2001. Other income, net, for the quarter totaled $134,000 compared to $2.0 million last quarter. It is down due to continued low interest rates. This change clearly impacted our ability to generate a positive net income for the first time in 29 quarters. Net income was a loss of $2.2M.

Our balance sheet remains extremely strong with cash and short and long term marketable securities of $565.6 million. Our cash flow from operations for the quarter was positive $5.2 million. Our days sales outstanding remains at a low 49 days, and our inventory turnover ratio is now a record 5.9.

Our manufacturing performance is centered around smoothly transitioning to 6" wafers in Oregon, and the transfer of production in Texas to our new Richardson fab. Both are going well. We continue to spend aggressively in engineering to develop new products, last quarter releasing 32. Design wins remain high at 178.

For Q1, our wireless phone business revenue in this market was down slightly compared to Q4 2001 with strength in IF SAW filters and duplexers offset by a decline in wireless GaAs products. The first quarter was an active quarter for us for new product launches and design wins. We had 80 design wins in the quarter. In CDMA, we won 23 RF filters, 21 receivers, 13 IF filters and 4 duplexers; in GSM we won 2 GSM PAs and 4 GSM RF filters; in TDMA we won 10 RF filters and 1 TDMA duplexer. We also won 2 wireless local loop designs for Korea. We received our first order for our SiGe CDMA power amp module. We plan to introduce our GSM power amp module to the market this quarter. Stay tuned for details. Our focus includes more modules, entry in GSM phones, and broadening our application base within the mobile phone.

Our broadband and microwave products continue to perform well. Our defense sector remains robust with significant business from the large defense contractors. We were awarded key supplier awards recently by both Raytheon West Coast and Northrop Grumman for our outstanding support. We had 5 new military design wins in the first quarter. Our satellite and space business was down in Q1 driven by slips of major infrastructure programs at two of our major customers. This should be our low point and we expect some improvement throughout the year if the rest of our programs stay on track.

We recently captured two new satellite programs that could put this business back on track in Q3. Our design activity was also very strong with 16 new design slots. Our point to point business remains weak, but design wins were also strong in this sector with 18 recorded in Q1. The wireless local area network has become strong. We are seeing increased shipments to several customers and opening new customers. This area could be as much as 5% of sales in 2002. We recorded 8 new design wins in this area alone. We also recorded 3 in LMS, 3 in CABLE, 2 in MMDS, and 2 other miscellaneous design wins in the overall broadband market.

Base station revenue improved in Q1 compared to Q4 2001 due to increased sales of SAW filters for both GSM and CDMA base stations. We had 2 wide band CDMA, 2 EDGE and 3 CDMA design wins. In addition we had 9 more wins for general-purpose small signal parts with a major reseller of parts to this market.

The optical networking market was hurt by the economic slow down and excess capacity throughout 2001 and this trend appears to be continuing. We have just introduced several important OC768 products directed at the major players in this market. Our customers have given positive feedback on these products. In fact, at the OFC Show, Corning, JDS, Multilink and Picosecond Pulse Labs demonstrated new hardware at 10Gb/s and 40Gb/s using our new drivers. We had 23 design wins in 02 for optical networking, which included 15 for OC192, 6 for OC768 and 2 instrumentation.

During the last quarter, TriQuint was awarded one of Oregon's "100 Best Companies to Work For" by the Oregon Business Magazine for the second year in a row.

We also recently announced a new organization designed to leverage our diversified business to address our global markets, to provide more focus on our growing module business, and to group our business units geographically to focus on development and manufacturing. We will adopt a 2 or 3 "in-the-box" leadership plan, similar to what Intel, Microsoft, Dell, Applied Materials and other leading edge technology companies now use.

TriQuint's Wireless Modules and Worldwide Sales Unit with operations in Oregon, Florida, and Massachusetts, will design and market modules for the wireless handset market. This group will have worldwide responsibility for the module design and marketing effort and will leverage TriQuint's technologies and products ranging from SAW filters and duplexers to GaAs and silicon germanium power amps and receivers. Ron Ruebusch and Brian Balut are named to the Office of the President of the Wireless Modules and Worldwide Sales business unit. This team will also manage the Worldwide Sales organization.