Radio chip expert TriQuint Semiconductor (Nasdaq: TQNT) is keeping pace with the market, even beating the competition in some cases. The company could do even better by building out its manufacturing capacity a bit faster. To the company's credit, that's exactly what's happening now.
TriQuint reported third-quarter sales of $237 million and non-GAAP earnings of $0.27 per share. That's 37% revenue growth and 170% stronger earnings year over year, easily surpassing major rival RF Micro Devices (Nasdaq: RFMD) on the top line and keeping about even with RF Micro in terms of earnings growth. We'll see how the whole market-share puzzle works out when the third and final piece, Skyworks Solutions (Nasdaq: SWKS), reports earnings next week. So far, you can tell that TriQuint likely stole some revenue share from RF Micro.
But like I said, things could have been even better. TriQuint told analysts on the earnings call that it had to direct some of its customers elsewhere when they came around to order smartphone parts -- TriQuint's internal manufacturing lines simply couldn't churn out enough chips to keep everyone happy. To remedy this problem, the company is stepping up its capital investments from $31.7 million in the third quarter to about $40 million - $50 million in the fourth. There's a new production line under construction in Texas, scheduled to come online in mid-2011. These things don't happen overnight, giving the competition another quarter or two of opportunity to steal what would otherwise be TriQuint's business.
These chips are common in Apple (Nasdaq: AAPL) gadgets, including the iPhone and iPad, and you certainly don't want to disappoint Steve Jobs. Samsung and Motorola (NYSE: MOT) are becoming smaller pieces of TriQuint's customer list instead, and management hopes to regrow those orders once the extra capacity comes into play.
Keep an eye on how this three-way drama develops by adding TriQuint, RF Micro, and Skyworks to your watchlist.
