ELECTRONICS company Filtronic has won a contract that will secure the long-term future of its North-East operation - and bring it back into the black.

The firm spent three years and ploughed millions of pounds into developing leading products for the third generation (3G) mobile phone industry at the former Fujitsu factory in Newton Aycliffe, County Durham, where it employs about 250 people.

The investment in Newton Aycliffe has paid off with the development of cutting-edge compound semi-conductors - a vital component in Filtronic's new transistor, that allows 3G networks to boost their signals to users, at a fraction of the cost of existing systems.

The company has signed its first agreement with an un-named player in the 3G market, to supply the transistors, along with other technology. And other manufacturers have already expressed an interest in the hardware.

Filtronic's executive chairman, Professor David Rhodes, said: "This is a significant deal for the company as a whole and its success was crucially dependent on Newton Aycliffe."

The plant racked up losses of £14.5m in the year to the end of May, but the deal is being seen as the breakthrough Filtronic has been waiting for and could see the plant turning a profit by 2005.

Shares that had remained flat over the past six months at about £1.20 have steadily increased and soared a further ten per cent yesterday, to about £3.30.

"We had to have control over the underlying technology in our market and now we have started to achieve that," said Prof Rhodes.

"We have created something that is unique in the world and therefore it puts us in a strong position."

Compound semi-conductors are already used in a range of everyday goods, from mobile phones to DVD players.

"This will provide products in several areas for years, if not a decade or more," said Prof Rhodes.

"What silicon chips did for technology in the last 25 years, compound semi-conductors will do in the first 25 years of this century."

Anthony Platt, from North-East stockbrokers, Wise Speke, said: "This is very positive news for Filtronic and has secured the future of the company."

Large scale production at the plant is not expected to start until the second half of next year. But Filtronic is already looking to secure contracts for its technology with the defence industry