Laser maker Newport Corp.’s burgeoning line of products for the microelectronics market is fueling optimism for a rebound this year after the federal government shutdown and sequestration tempered sales in 2013.
It is aiming to make strides this year among chipmakers and other companies anxious to improve manufacturing processes using newer technologies grounded in optics to power the next generation of smartphone and tablet chips.
Newport Corp.’s breakthrough Quasar laser, introduced last year, has opened new market opportunities in TV, smartphone and tablet panel displays, as well. The instrument is billed to improve precision and yields in glass cutting, printed circuit board drilling and wafer scribing applications.
That’s an important benefit since the cover glass used to manufacture smartphones and tablets is very brittle, and about half gets damaged in production.
“It’s all about mobile devices,” said Chief Executive Robert Phillippy, underscoring Newport’s ongoing shift into other commercial sectors.
Irvine-based Newport makes lasers and related controls and equipment for telecommunications companies, chipmakers, researchers, medical companies and manufacturers. It built its name the last 40 years serving the defense and science industries and still relies on those segments for about a third of its revenue.
Those sluggish markets are a big reason Newport’s sales are projected to dip about 7.5% in 2013 to about $550 million. Investors will get clarity when the company releases its annual report next month.
The 16-day government shutdown in October stalled contract talks and delayed order shipments. The sequestration, which cut agency budgets across the board indiscriminately, further clouded business last year, Phillippy said.
“2013 was not that stellar of a year,” he said.
The company got some clarity earlier this month regarding its 2014 business outlook when Congress passed a $1.1 trillion bipartisan bill to fund the government through September.
“That will certainly create some stability in our research community customer base,” Phillippy said. “It was clearly suppressed during the course of 2013.”
That’s another reason Newport enters 2014 with higher expectations on Wall Street, where analysts forecast sales to increase more than 9% to about $601 million, which would be a record for the company.
Semiconductor equipment sales are pegged to hit nearly $44 billion this year, up 21% from a year ago, according to forecasts by Semiconductor Equipment and Materials International.
The San Jose-based trade group cited “significant” NAND flash investments by Samsung in China and a Toshiba/SanDisk joint venture in Japan, as well as Intel expanding its fabrication factories in Ireland as reasons for the spending increase.
NAND flash is the primary storage component in solid state drives and is also used in cameras, laptops and other products for general storage and data transfer.
The rosier outlook comes as Newport undergoes consolidation and zeroes in on its core lasers, optics and photonics technologies.
Newport is expected to close the $6 million sale of its micro robotics systems business unit this month. The management-led buyers are expected to sublease the company’s Massachusetts facility and retain all of the unit’s employees.
The line, which develops and manufactures die bonding systems for the microelectronics, defense, medical and industrial markets, generated about $12 million in revenue and essentially no operating income or cash flow in the 12 months through September.
Newport recently began moving its manufacturing operation in Stratford, Conn., to Wuxi, China, and Bozeman, Mont.
The move, expected to conclude by midyear, is projected to save the company about $1 million annually.
Newport employs more than 2,400 globally and about 420 in Irvine.
