Cosemi Technologies Inc.
Where: Irvine
12-month sales: $1.6 million
Two-year growth: 300%
OC workers: five
Business: electronics for optical networking devices
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Chips that process light signals in networking gear, computers and consumer electronics are driving Irvine’s Cosemi Technologies Inc.
The company ranked No. 8 on the Business Journal’s 2009 list of fast-growing private companies with sales growth of 300% for the two years through June 30.
For the 12 months through June, Cosemi had sales of $1.6 million, up from $400,000 for the same period in 2007.
The company has seen triple-digit growth since it was founded in 2006, according to Chief Executive Nguyen X. Nguyen.
Cosemi designs chips that convert strains of light into electricity to speed the flow of data.
The technology allows data to be transferred faster—at speeds of 10 gigabits per second to 100 gigabits per second—along cables that are the width of a human hair instead of more expensive, bulky copper cables.
Cosemi’s chips are found in gear used in telecommunications networks, data centers and in some computers and consumer electronics.
Using light to transmit data has been around since the 1980s and is a staple of telecommunications networks and corporate data rooms.
What’s now Sprint Nextel Corp. touted the technology in commercials as far back as 1984, saying you could hear a pin drop over its fiber-optic phone lines.
Some see the technology as being on the verge of taking off for more everyday uses, possibly replacing the metal-based cables now used to link digital cameras, camcorders, music players and other devices to computers.
Intel Corp. is pushing what it calls Light Peak, which would use optical wires to transfer data between PCs and other devices at faster speeds.
And Verizon Communications Inc. is making a big push into homes with its Fios TV service, which delivers cable-style programming over fiber-optic cables.
Cosemi sells its chips to circuit board makers that in turn sell to big players such as Intel and Cisco Systems Inc. It has about 30 customers.
“We sell globally,” Nguyen said. “We have customers in the U.S., China, Southeast Asia, Europe and we recently have seen a lot of growth overseas.”
The largest user of Cosemi’s chips is a company in Northern California that Nguyen declined to name.
The company has many rivals, including makers in South Korea and the rest of Asia.
Cosemi has a different business model, designing chips and then contracting out for their production.
It’s a strategy made famous locally by Irvine chipmaker Broadcom Corp., which is known as a “fabless” chip company since it doesn’t run its own silicon wafer fabrication plants.
Like Cosemi, Broadcom contracts out for production of its chips.
Cosemi taps plants in Los Angeles and San Jose to make its chips. The fabless model helps keep costs low, according to Nguyen.
“Our business model is unique,” he said. “We don’t get burdened with a lot of legacy problems” and costs that chipmakers with plants have. “We can enable this technology at a commodity price.”
Cosemi is profitable, Nguyen said.
“It was very tough for us because we started in an industry that was already in a downturn so it was very hard to get going,” he said. “But once we started, we kept growing.”
Nguyen founded the company in 2006 with money from friends and family. A technology veteran, he worked for more than a decade in wireless phones and said he saw a need for optical chips.
Cosemi caught a break its first year in business when Irvine-based chipmaker Microsemi Corp. transferred its optical chip product line and development and qualification process to Cosemi.
The company added business as smartphones and high-definition TVs using optical chips gained momentum.
“There is a demand for broadband and it is increasing,” Nguyen said. “The smartphone, the Internet are getting upgraded. We are in a product cycle that needs chips.”
Cosemi recently signed an exclusive deal with one of its biggest customers. Nguyen declined to provide specifics.
The company has received some buyout interest. Nguyen said he isn’t entertaining offers because he’s focused on building Cosemi.
The company is taking on its first investor to help fund growth, according to Nguyen. That deal should be finalized in about a month, he said.
