Chipmaker Semicoa Semiconductors is ramping up production at its Costa Mesa plant after seeing bigger demand from aerospace and defense contractors.
The privately held company invested more than $4 million this year to expand and upgrade its 12,000-square-foot chip plant.
Semicoa upgraded some of its machines, added manufacturing software and expanded its test equipment.
It also hired workers, increased the plant’s hours and streamlined operations for faster turnaround.
“It’s a significant financial investment,” Chief Executive Perry Denning said.
Semicoa overhauled its “burn-in” equipment, machines that rigorously test chips before they go out to customers. The machines help to weed out any bad chips.
“In the manufacturing of solid state devices, you basically put the product into operation for some period of time to get rid of parts that would stop working early out in the field,” Denning said. “If you are putting the chip in a satellite, you don’t want to have to send a repair man up there to solder in a new one.”
The size of Semicoa’s previous burn-in facility put a cap on how many chips it could make at a time. The expansion increased its capacity by more than 80%, Denning said.
It also helps Semicoa compete against rivals, including Irvine’s Microsemi Corp., which counts yearly sales of about $500 million.
“That is the area that we had least amount of capacity and it is directly tied to our ability to grow our revenue and supply parts to our customers,” Denning said.
It also cut in half the lead time that Semicoa needs to churn out an order, he said.
Semicoa, which has about 145 workers, is one of the few companies that actually makes chips here.
Others include Newport Beach’s Jazz Semiconductor Inc., the chip making arm of Jazz Technologies Inc., and Microsemi, which has a plant in Garden Grove.
Most, including a handful of startups and Irvine’s Broadcom Corp., design chips here and have them made at factories in Asia.
Semicoa has held on to its local plant because its government customers require tight control and strict quality and testing standards, Denning said.
“Because of the kind of product we build we have to have a vertically integrated production facility,” he said. “The nature of our product and our market is such that they want us to build it in the U.S.”
The bulk of the company’s sales come from transistor chips that regulate the flow of electric currents. They’re sold to top-tier defense and aerospace contractors, including Northrup Grumman Corp., Lockheed Martin Corp., Boeing Co., Raytheon Co., General Dynamics Corp. and their subcontractors.
The contractors build the chips into a variety of devices, such as satellites, munitions, planes and tanks.
Semicoa also makes what’s called silicon photodiodes, chips that receive light and create paths for electricity to flow. They’re found in medical computed tomography scanners and X-ray machines used to scan bags at airports.
The company’s chips receive and transmit a digital picture of whatever is being scanned.
“These are product lines that we have a number of patents on,” Denning said. “It has very good advantages. What this does is it has better isolation and a better response to the signals that come across with the X-ray.”
The company has made a push the past few years to get its photodiode chips into medical devices and security gear.
“It expands our product mix into areas where we believe we can effectively compete, and it diversifies our business,” Denning said.
Semicoa began ramping up production after recently receiving big customer orders. It declined to name the customers.
The company has seen revenue grow 15% to 20% on a quarterly basis,a record high in its 40-year history.
Semicoa doesn’t disclose sales. The Business Journal estimates yearly sales about $200 million.
Unlike Microsemi, which has done a few acquisitions in the past two years, Semicoa is re-investing its cash into operations.
Microsemi recently combined operations and sold off its original Santa Ana plant and another in Pennsylvania to raise cash.
An acquisition “is a possibility,” Denning said. “But generally that takes quite a bit of cash and we’ve got upgrades and continue to use ours.”
Running the plant is a non-stop job, he said.
“A wafer fab facility is probably one of the more complex manufacturing operations anywhere,” Denning said. “It takes constant maintenance and constant supervision.”
