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Radio frequency filters (RF filters) enable phones to receive and transmit voice, video, and data over wireless networks.
With each new network upgrade (1G, 2G, 3G, 4G, and now 5G), RF filters take a more prominent role in devices (smartphones, etc.) as the frequency ranges get higher and higher. After each network upgrade, RF filter companies generate more revenue as the cost per device for filters goes up so it’s a steadily increasing and lucrative business.
The RF filter market is dominated by two companies, Broadcom and Qorvo. When Broadcom bought Avago, and RF Micro Devices merged with TriQuint to form Qorvo, a duopoly that controls the RF Filter was formed.
Original equipment manufacturers (OEM’s) therefore have little choice for sourcing RF filters. They either must turn to Broadcom or Qorvo.
Over the last several years Jeff Shealy, former RF Micro Devices founder, quietly began a new RF filter business. Shealy started his new RF filter business to focus on improving the high-end filter market with better characteristics, which is what the next gen wireless network (5G) will require, especially at the higher frequencies.
At the higher end frequencies, Jeff Shealy’s new company, Akoustis Technologies, has come into the market with patented filters and major design wins after a few years of research and development.
With the new and better patented technologies in the higher frequency bands, Akoustis Technologies should ramp from zero in revenues to the 10s of millions in the next year or so.
FMT Advisory believes as Akoustis begins to scale, the more likely scenario will lead to a buy-out of the company at a substantial premium to today’s market price.
To maintain their market dominance and widen their moats, either Broadcom or Qorvo will all too likely offer to take Akoustis out to protect their dominance and gain control of Akoustis’ stellar design wins.
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