GREENSBORO–RF Micro Devices (Nasdaq:RFMD), which makes proprietary radio frequency integrated circuits, says it has agreed to acquire San Diego-based Silicon Wave Inc. for $10.8 million in cash.

Under terms of the deal, RFMD will pay approximately $10.8 million in cash in exchange for all outstanding shares of Silicon Wave capital stock the company does not already own.

If certain revenue goals are met in 2005 and 2006, RFMD will pay Silicon Wave shareholders additional cash.

RFMD says that excluding one-time acquisition related charges, the deal is expected to dilute RFMD’s earnings per share by about 2 cents in the quarter ending June 30. The company says it expects the transaction to become neutral or to add to its earnings in 12 to 15 months.

Silicon Wave’s Bluetooth product portfolio includes highly integrated single-chip CMOS radio processors with a unique architecture that gives them a cost and size advantage compared to competitors, RFMD says.

The company expects the deal will increase its Bluetooth related revenue sequentially throughout its current fiscal year, which ends March 31, 2005.

Bob Bruggeworth, president and chief executive officer of RF Micro Devices, said, “Leading industry analysts, such as IMS Research, forecast approximately 100 million Bluetooth devices will be shipped this year. This growth is being driven by the cellular handset market and related markets, including wireless headsets, printers and PC peripherals.”

Stuart Carlaw, senior Bluetooth analyst at IMS Research, said, “With the acquisition of Silicon Wave, RFMD puts itself in an extremely strong position to capture growth in the explosive Bluetooth market, which we anticipate will grow more than six-fold over the next three years.

“RFMD is a leader in the cellular PA market with a customer base that’s ripe to leverage for Bluetooth sales. Silicon Wave is an emerging force in personal area networks with highly integrated all-CMOS Bluetooth offerings that are gaining traction as stand-alone products.”

The merger transaction is expected to close within 30 days and will be accounted for under the purchase method of accounting. The boards of directors of both companies have approved the merger, which awaits approval by Silicon Wave’s shareholders and other customary closing conditions.

RFMD stock closed at $8.25 Wednesday, up 25 cents or a little more than 3 percent.