ALLENTOWN, Pa. Agere Systems executives are banking on a recovery in the telecommunications infrastructure market and 3G wireless deployment to break out of a lengthy downturn over the next year.
The forecast came during Agere's first "analyst day" since the company was spun off from Lucent Technologies in June 2002.
"The infrastructure market is relatively stable, but still weak," said John Dickson, Agere's president and CEO. "We are looking at an infrastructure market recovery by the second half next year, as well as a 3G ramp."
Dixon said focused investments will be made to sustain current growth in 3G cellphones and consumer hard disk drives. Also, the company will continue to leverage IP in new products such as storage area networks and printers. Agere also plans to expand into selected markets such as RF power and Ethernet.
"In FY2003, we have resized the business to return to profitability," said executive vice president and chief financial officer John Gamble. "In FY2004 we will drive toward our business model of near 50-percent gross margins and 15-plus percent in operating margins."
Agere's focus is to provide integrated circuit solutions for wireless data, high-density storage and multiservice networking applications.
"Leveraging long-standing mixed-signal design expertise is our heritage," said Necip Sayiner, vice president of the Networking ICs division. "Differentiated IP is in our DNA."
Sayiner said there is a $2 billion market in chips for the enterprise and "we aim to take advantage of it." He added that Agere content will be in all blocks in some wireless network systems. Agere is a market leader in DSPs for wireless infrastructure and traffic management, and is number two overall in wireless infrastructure ICs.
As part of its restructuring, Agere has switched to a foundry manufacturing model. "At 130 nm and below all our production will be sourced from commercial fabs," said Andy Micallef, vice president for supply chain management. In addition, statistical models developed at neighboring Lehigh University and used in the company's Advanced Planning System enables Agere to respond to increases and reductions on a daily basis, according to Micallef. "We restructure our fabs every single day to where inventory turns almost match customer requests."
On the client side, Agere has recently added a Media Connectivity division to its other three units: HDD Storage, Mobile Terminals and PC Connectivity. "The Client Systems Group is positioning itself to leverage the next technology wave, that of 'personal broadband' for entertainment applications," said Ron Black, executive vice president.
Agere reported its strongest quarter yet as a public company during its recently concluded. Dickson expressed satisfaction with exceeding 40 percent gross margins for the first time since the initial public offering.