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Microsemi Corporation(MSCC - Analyst Report), an original equipment manufacturer (OEM) of a broad range of high-reliability and analog/mixed signal integrated circuits, announced that it launched radio frequency (RF) transistors for high-power air traffic control (ATC), secondary surveillance radio (SSR) applications.

The SSR is a unique application found in aircraft. A radar-fitted aircraft can send messages to air traffic controllers through the SSR system. The device is very helpful for air traffic controllers as it enables very easy identification, tracking and measuring of the distance and location of any airplane whenever required. It therefore has the potential to fight or ward off terrorist attacks.

For the past five decades, Microsemi has grown as a developer of new and innovative products for the aerospace and military segments. The product portfolio comprises a wide range of high-performance, high-reliability RF and power components, analog and RF ICs, standard and customizable system-on-chip solutions and mixed-signal and radiation-tolerant FPGAs.

Research and consultancy firm RNCOS expects the global aerospace segment to grow at a compound annual growth rate (CAGR) of 2.5% from 2012 to 2015, reaching $460.0 billion by 2015. The increasing adoption of electronics in the segment is therefore likely to be a positive for suppliers such as Microsemi as well as its peers including Altera Corp. (ALTR - Analyst Report), Lattice Semiconductor Corp. (LSCC - Snapshot Report), and QuickLogic Corp. (QUIK - Snapshot Report).

However, according to MarketResearch.com, the budget allocated for U.S. defense spending was $705.6 billion in 2011, representing a five-year CAGR of 6.4%. However, it is anticipated to decline at a compound annual rate of change (CARC) of -3.9% between 2011 and 2016. Thus, spending is expected to go down to $578.3 billion by 2016-end.

Microsemi’s revenue in the third quarter of fiscal 2012 was $259.2 million, up 4.0% sequentially and 19.6% year over year. The defense & security market generated 28.0% of sales, increasing 2.0% sequentially; and aerospace generated 21.0% of revenue, increasing 5.0% sequentially. The defense, aerospace and medical markets largely use Microsemi’s high-reliability chips, while the other markets use its analog/mixed signal products.

Although the defense budget is shrinking, Microsemi may be expected to gain from its new product launches targeting secondary surveillance radar search and tracking applications.

Currently, Microsemi Corporation has a Zacks #3 Rank, implying a short-term ‘Hold’ rating.

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