A decade ago, Irvine’s Teridian Semiconductor Corp. was the weakest link for its former parent company. Now the chipmaker is in a growing market and is evaluating a public offering.
Teridian has reworked its business and is pegging its growth on making chips for a new type of electricity meter that operates as part of a smart grid designed to reduce energy consumption.
“We have this long-term vision to go into the smart grid,” Chief Executive Gerald Fitch said.
Teridian has about 100 workers in Irvine and sees an estimated $75 million in yearly sales. The closely held company doesn’t disclose financials.
These days, some 60% of Teridian’s revenue comes from meter chips. The rest comes from “legacy” products, which include chips that go into set-top boxes, circuit breakers and networking gear.
“Five years ago, we had zero revenue from meters,” Fitch said. “But this was always a long-term strategy.”
Teridian sees a big market for smart meter chips, which use networking technology to track electricity usage and send data to utility companies and residents.
Fitch said that most of the some 1.6 billion electricity meters in the world are unreliable.
Teridian’s chips help utility companies get more accurate meter readings, cut down on billing errors and prevent tampering.
The company counts some 70 customers, which build meters and sell them to utilities.
They include General Electric Co., South Carolina’s Actaris Liquid Measurement LLC, Germany’s Elster Group SE and Australia’s Landis & Gyr Holdings Pty.
Teridian has roughly a quarter of the market for chips that go into new meters, Fitch said.
It competes with Texas Instruments Inc. and Analog Devices Inc., among others.
The company’s chips also could go into home appliances and servers, some of which are starting to be built with power usage displays on the devices themselves.
“There is this cascading effect that the smart metering push has created,” Fitch said. “On the outside there are meters and on the inside of the home or office there will be a host of opportunities to sell energy measurement chips as well.”
Teridian is known as a fabless chipmaker. It designs chips in Irvine and has them made and tested in Asia.
Teridian has made a slow ascent through the ranks of the area’s chipmakers.
It now is one of the largest 10 semiconductor companies here by workers—a list that includes Irvine’s Broadcom Corp., Newport Beach’s Conexant Systems Inc. and Irvine’s Microsemi Corp., among others.
TDK Days
Teridian started as TDK Semiconductor Corp., part of Japan’s TDK Corp.
After the tech bubble burst, TDK Semiconductor sought a public spinoff from its Japanese parent. The plan faded after sales dropped by half from 2001 to 2002 and it sunk into red ink.
Fitch, who had been rising through the ranks, took on the job of chief executive in 2004, hoping to boost the company by tightening up operations, pursuing niches and being more nimble.
By 2005, TDK sold the business to San Francisco-based investment firm Golden Gate Capital.
Teridian has come pretty far since its break from TDK, when it saw yearly sales of around $20 million.
The company scaled down its operations to be able to move more quickly into new markets, according to Fitch.
Teridian still has a ways to go in its comeback. When Fitch arrived in 2000, the chipmaker had 250 workers and yearly sales of $130 million.
Fitch’s background isn’t in chips or engineering—he’s a finance guy. Before coming to TDK, he was chief financial officer at Glendale-based Airport Group International, which manages airports around the world. The GE Capital-backed company was sold for $300 million in 1999.
Golden Gate, where Fitch has a board seat, hasn’t made its exit plans known.
“Golden Gate has always said, ‘Just keep doing what you are doing,’” Fitch said.
A buyout or public offering is a viable option, Fitch said.
