Qorvo Inc. (QRVO - Free Report) recently unveiled QPD1025 RF transistor. The company asserts that it is the world’s highest power transistor functioning at 65 volts with 1.8KW. This futuristic — gallium nitride on silicon carbide (GaN-on-SiC) RF transistor — is likely to find significant application in defense and avionics.
QPD1025 features remarkable 15% drain efficiency improvement over LDMOS. It enhances duty cycle performance and pulsed power of silicon bipolar and silicon LDMOS devices. The high power density product renders the practice of combining amplifiers redundant. The innovative transistor excludes diamond integration for thermal management, making it economical as well.
The aforementioned features combined with reduced size, extended gain and reach, and exceptional signal integrity makes the solution an ideal choice for ‘‘L-band avionics and Identification Friend or Foe (IFF) applications.”
Upbeat Q3, IDP Outlook Positive
The company’s shares have returned 20.5% year over year, outperforming the 10.6% rally of the industry. The growth can be attributed to strong top-line growth driven by a robust portfolio.
In third-quarter fiscal 2018 revenues on a non-GAAP basis increased 2.4% year over year to $844.8 million. The company’s Infrastructure and Defense (“IDP”) segment reported revenues of $203 million which grew 20% year over year. Growth can be attributed to strong demand for the company’s solutions in defense (advanced radars and other electronic warfare products), surge in GaN revenues and connectivity (Wi-Fi and emerging IoT applications).
For fiscal year 2019, the company projects robust IDP growth, driven by higher trends in defense IoT and GaN.
What Investors Need To Know?
Specifically catering to RF GaN market for 2016-2021 time frame, The Strategy Analytics Strategic Component Applications (SCA) group estimates the revenue to reach $733 million in 2021 implying a CAAGR (compound annual average growth rate) of 14.1%.
Per a MarketsandMarkets report, the GaN power device market is projected to grow at CAGR of 29.1% to reach $1.89 billion by 2023. The base year, 2016 valuation was $0.327 million and the time period under consideration is 2017-2023.
Introduction of QPD1025 strengthens Qorvo’s GaN portfolio. Deliverance of high maturity processes along with high reliability gives the company’s product a competitive edge in the market. The company is capitalizing on the lucrative prospects developing in defense and avionics by rendering effective GaN solutions.
However, significant exposure to China is a significant headwind for Qorvo. Escalating trade war between the U.S. and China can seriously hurt the company’s growth prospects in 2018.
Zacks Rank & Key Picks
Qorvo has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector includes Lam Research Corporation (LRCX - Free Report) , Nvidia Corporation (NVDA - Free Report) and DST Systems, Inc. , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Lam Research, NVIDIA and DST Systems are projected at 14.85%, 10.25% and 10.00%, respectively.
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