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Agere Challenges Amp Champ

Agere Systems (NYSE: AGR/A) wants to challenge Motorola Inc.'s (NYSE: MOT) dominance in the radio frequency (RF) power amplifier transistor market with products that it says will reduce the energy requirements -- and cost -- of base stations.

The Lucent Technologies Inc. (NYSE: LU) spinoff today announced a range of 21 chips targeted at 2.5G and 3G base station vendors, such as Nokia Corp. (NYSE: NOK) and LM Ericsson (Nasdaq: ERICY), as well as dedicated power amp module manufacturers like Andrew Corp. Volume production of the components is expected to commence in the third quarter of this year(see Agere Targets Base Stations).

Power amplifiers amplify voice and data signals in base stations, and use power amp transistors that are about the size of a nickel. Agere has managed to reduce the power requirements of its transistors by making them thinner, using a properitary manufacturing technique.

Agere says that "the world's coolest wireless amplifiers" [ed. note: surely an oxymoron?] using the world's grooviest transistors will run 10 to 15 percent cooler than the competition [Hello, Moto!]. Vendors that use the chips will be able to produce smaller and more energy efficient base stations, the company says.

However, Eric Rerisi, director of research at Allied Business Intelligence Inc. (ABI) cautions against the idea that a 10 percent cooler power amplifier will automatically mean that a base station is 10 percent more energy efficient. "The power amplifier is only one piece of the puzzle," he says Motorola currently has 50 percent marketshare for base station power amp transistors, which is worth about $580 million annually, according to Rerisi. "I think that Agere has some room to take market share from Motorola," he says.

In fact, initially, Agere is going to need to take customers from Motorola, Rerisi notes, since there has been a "slump in demand" for base stations from wireless operators, which are squeezing the infrastructure vendors to cut costs.

However, Agere argues that this emphasis on cutting costs could work in its favor, as its products will help to reduce expenditure. The company says that more than 20 companies are evaluating its new product line.

— Dan Jones, Senior Editor, Unstrung
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