Lake Forest-based Newport Media Inc., a designer of chips for watching TV on phones and other handheld devices, has raised $30 million in a third round of funding.
The funding brings Newport Media’s total raised to $66 million.
Venture capital investor Duff Ackerman & Goodrich LLC led the round. There are no immediate plans for another round, Chief Executive Mohy Abdelgany said.
“We expect to be making revenue in the second half of 2007,” he said. “We don’t anticipate future rounds because we hope to be breaking even soon.”
Newport Media could extend the latest round to include strategic investments from potential customers, Abdelgany said.
He declined to mention them.
The company hopes TV watching on cell phones and other portable devices will take off in the U.S. in the same way that camera phones did.
“They will have similar traction over a decade,” Abdelgany said.
Today, cameras are in about 85% of all phones made, he said.
The company recently came out with a mobile TV receiver chip for phones and other devices that Newport Media says uses less power than others.
Newport Media’s chips have been in a sampling phase for the past five months.
They are set to go into production early next year, Abdelgany said.
The majority of the company’s sales would be from outside the U.S., Abdelgany said.
“The U.S. in general is typically two to three years behind gadget-oriented markets like Japan and Korea,” he said. “(The U.S.) is already offering the service. I am hoping within a couple of years we will start seeing traction in this market.”
About 60 employees work at the company’s 11,000-square-foot office in Lake Forest. Newport Media is moving into another 6,000 square feet of space in the same building next year.
Newport Media plans to hire about a dozen engineers in the next year, Abdelgany said.
Most of its manufacturing is done under contract in Taiwan.
Duff Ackerman & Goodrich typically invests in specialty manufacturing, communications, media and information technology companies.
Some of Newport Media’s other investors are Westport, Conn.-based Oak Investment Partners, Redwood Shores-based Global Catalyst Partners, Palo Alto-based Pinnacle Ventures and Benchmark Capital and Venrock Associates in Menlo Park.
Newport Media was started in early 2005 by Abdelgany.
Abdelgany previously worked at the local operations of Massachusetts-based Skyworks Solutions Inc. and Newport Beach’s Conexant Systems Inc.
The latest financing will “enable us to ramp volume production to our customers while expanding our product portfolio,” Abdelgany said.
Western Digital Shuffle
Lake Forest-based Western Digital Corp., a disk drive maker, said former executive Jim Morris has re-joined the company in charge of its portable storage business.
“Jim adds strategic and business management strength to the team as we continue our long-term initiative of leveraging the successful desktop business and efficient business model into new markets,” said John Coyne, the company’s chief operating officer and incoming chief executive.
Morris came from Newport Beach-based RSI Holding Corp.’s RSI Home Products, a maker of household cabinets and other products.
Prior to that, Morris served Western Digital for four years as vice president of business development and later led its enterprise storage business unit.
Before his first position at Western Digital, Morris was vice president of business development at PeoplePC Inc. of San Francisco.
The announcement comes after a series of management moves at Western Digital.
In November, Western Digital’s chief executive, Arif Shakeel, said he would step down in January.
Shakeel, 51, has worked at Western Digital for 20 years and will continue to advise the company through June.
Coyne is set to become chief executive when Shakeel steps down.
He took over the president’s title from Shakeel back in May.
Also a Western Digital veteran, Coyne first joined the company in 1983 and has served as senior vice president of worldwide operations and had a key role in the acquisition of Read-Rite Corp., a maker of drive parts.
A year ago some company watchers were surprised when Shakeel took over for longtime boss Matt Massengill, Western Digital’s 45-year-old executive chairman.
Now some were surprised to see Shakeel stepping down after just a year in the top spot.
Chip Outlook
Morgan Stanley analyst Mark Edelstone said he sees “a mixed bag” for the chip market next year, according to a report last month on EETimes.com, an electronics industry site.
The overall chip market is projected to grow 10% in 2007, Edelstone said. That’s just a smidge higher than the 9% he estimated for 2006.
Some signs show the market may be getting softer.
Some 40% of all chipmakers missed their forecasts in the third quarter, Edelstone said. The fourth quarter has been slow and chip inventories remain at the highest levels since 2002, Edelstone said.
This month, the Semiconductor Industry Association, a San Jose-based industry group, lowered its forecast for the next three years.
The group estimates that sales will reach $274 billion next year at 10% growth, and then taper off to just 6% growth by 2009.
The World Semiconductor Trade Statistics group of San Jose in October also cut its industry forecast for the next few years.
It projects moderate growth in the 8% to 12% range in the next three years.
