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Skyworks’ Buy Grows Share in Emerging Markets

Skyworks Solutions Inc., a chipmaker that has an office in Newport Beach, expanded its business of selling chips to makers of low-cost cell phones with a recent local acquisition.

Woburn, Mass.-based Skyworks recently bought Irvine chip startup Axiom Microdevices Inc., a smaller rival, to augment the niche business of ultra low-end phones, which sell for less than $50.

The deal “expanded our market in handsets with a segment that we didn’t previously address,” said Chief Executive Dave Aldrich. “We were able to improve our patent portfolio pretty dramatically in an important area.”

Axiom Microdevices, which has some 40 workers here, uses a lower-cost manufacturing process to make chips that help cell phones get better reception.

It designs power amplifier chips that help boost a phone’s signal so that cell towers can “hear” it. What’s different about Axiom’s chips is that the company has found a way to make them cheaper using complementary metal-oxide semiconductor technology, the most common form of chip making known as CMOS.

Making the chips via CMOS smoothes out potential production delays, which helps cell phone makers get their products to market faster.

It also makes phones much cheaper for sale in rural parts of China, India and South America.

“Axiom went after the same market that we did, but on the low end,” Aldrich said. “In emerging markets, cost is an issue that trumps performance.”

Skyworks was impressed that Axiom already was in production with some customers, which include Britain’s Vodafone Group PLC and Ningbo Bird Co., a Chinese cell phone maker, among others.

“Axiom is already in high volume production with several manufacturers in China, and our biggest market today is China,” Aldrich said. “They are the only one in their industry niche in volume production at this point.”

Terms of the deal weren’t disclosed. Skyworks has had its eye on Axiom.

“We are very cognizant of new technologies that are entering the market,” Aldrich said. “We have been tracking them since they first introduced a product and we’ve had conversations with them over the years. When they proved the viability of their products, we accelerated those discussions.”


Axiom’s Backers

Privately held Axiom had raised roughly $50 million in venture funding and doesn’t disclose sales.

Investors in Axiom included U.S. Venture Partners, Tallwood Venture Capital, Anthem Venture Partners and VentureTech Alliance.

Axiom, which started in 2002, saw some growing pains in its early days.

In 2005 the company faced a patent lawsuit from Austin, Texas-based competitor Silicon Laboratories Inc., which sought to block the company from producing its chips. Axiom prevailed after a federal court in Texas lifted an injunction.

Skyworks Solutions was created when Newport Beach chipmaker Conexant Systems Inc. spun off its wireless chip business and combined it with Alpha Industries Inc. a few years ago.

The company has some 200 local workers. Chief Executive Aldrich is based in Massachusetts but travels regularly to Orange County.

He has a team of senior executives,including the heads of sales, operations, communications and quality,who report to him from the offices here.

Skyworks makes its chips in Newbury Park.

The company has two lines of business: radio chips and analog chips.

Its radio chips for cell phones and smart phones translate analog signals into digital ones that can be processed by a baseband chip,the “brains” of a mobile device.

Skyworks said it’s the top supplier of these so-called power amplifier chips. Its customers are the world’s biggest cell phone makers, including LG Group, Nokia Corp., Motorola Inc., Samsung Group and Research in Motion Ltd., among others.

The company’s analog chips go into some wireless gear as well as into medical devices, the power grid, satellites and cars.

“We now ship more power amplifiers than any company in the world,” Aldrich said.

Skyworks saw $830 million in sales for the 12 months through October. The com-pany had a recent market value of nearly $2 billion.

Axiom was its second buy to build up its power amplifier business.

In 2007, Skyworks bought a power amplifier chip unit of Freescale Semiconductor Inc., which had a factory near Phoenix. The factory was shuttered last year after Freescale failed to find a buyer for other product lines made there.

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