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Qualcomm and TDK form joint venture on RF modules for IoT

Steve Rogerson
January 14, 2016
 
Qualcomm and TDK are forming a joint venture to enable delivery of RF front-end (RFFE) modules and RF filters into fully integrated systems for mobile devices and fast-growing business segments, such as the IoT, drones, robotics and automotive applications.
 
Under the name RF360 Holdings Singapore, the venture will draw upon Tokyo-based TDK’s capabilities in micro-acoustic RF filtering, packaging and module integration technologies and Qualcomm’s expertise in wireless technologies to serve customers with RF products in fully integrated systems.
 
“TDK is a leading electronic components manufacturer with cutting-edge expertise in RF filters and modules, and we are looking forward to deepening our collaboration and together accelerating innovation and better serving the ecosystem for next-generation mobile communications,” said Steve Mollenkopf, CEO of Qualcomm. “The joint venture’s RF filters will bolster Qualcomm RF360 front-end solutions to enable Qualcomm Technologies to deliver a truly complete solution to the ecosystem. This will enable us to expand our growth opportunity by allowing us to accelerate our strategy to provide OEMs across our business segments with fully integrated systems that will enable them to deliver at scale and on an accelerated timeframe.”
 
The two companies also plan to expand their collaboration around key technology fields, including sensors and wireless charging.
 
“The joint venture with Qualcomm is a win for both companies, which complement each other ideally,” said Takehiro Kamigama, president and CEO of TDK. “Customers will benefit from our unique and comprehensive portfolio, which will further strengthen TDK’s position in key growth business segments and open new and exciting business opportunities. In this context, it was a major objective to ensure that our customers can continue to expect a seamless supply of discrete filters and duplexers, as well as modules.”
 
The agreement is subject to receipt of regulatory approvals and other closing conditions and is expected to close by early 2017.
 
RF360 Holdings will have a set of filters and filter technologies, including surface acoustic wave (SAW), temperature-compensated surface acoustic wave (TC-SAW) and bulk acoustic wave (BAW) to support the wide range of frequency bands being deployed in networks across the globe. Moreover, it should enable the delivery of RFFE modules that will include front-end components designed and developed by Qualcomm. These components include CMOS, SoI and GaAS power amplifiers, a portfolio of switches enhanced via a recent acquisition, Antenna Tuning, and envelope tracking products.
 
RFFE could be an US$18bn opportunity by 2020, with filters acting as a key driver. The filter assets that will reside in RF360 Holdings are among the top three in the industry. TDK is shipping in excess of 25 million filter functions per day, and growing, and holds design wins at all major handset OEMs, including leading premium tier smartphones. TDK, and subsequently RF360 Holdings, are committed to investing in capacity increases to meet the growing industry demand.
 
The business that will be transferred constitutes a part of the total TDK SAW business group activities and the current run rate is approaching $1bn of sales per annum. About 4200 employees are involved in that business. RF360 Holdings will be a Singapore corporation and will have a global presence, with R&D, manufacturing and sales locations in the USA, Europe and Asia and its headquarters in Munich, Germany.
 
In addition to the joint venture, Qualcomm and TDK have agreed to deepen their technological cooperation to cover a wide range of technologies for next-generation mobile communications, IoT and automotive applications, including passive components, batteries, wireless charging, sensors and MEMS.
 
RF360 Holdings will initially be owned 51 per cent by Qualcomm Global Trading and 49 per cent by Epcos, a wholly-owned subsidiary of TDK. As part of the agreement, filter and module design and manufacturing assets, plus related patents, will be carved out from TDK and its subsidiaries and be largely acquired by RF360 Holdings, with certain assets being acquired directly by Qualcomm affiliates. Qualcomm has an option to acquire (and Epcos has an option to sell) the remaining interest in the joint venture 30 months after the closing date.
 
Giving effect to the payments to be made at the closing, additional future payments to TDK based on sales by the joint venture of RF filter functions, as well as Qualcomm and TDK’s joint collaboration efforts, and assuming Qualcomm’s exercise of its option to acquire Epcos’ interest in the joint venture, the aggregate transaction value is expected to be approximately $3bn. Qualcomm expects the transaction to be accretive to non-GAAP earnings per share in the 12 months following the transaction close.