Life can’t be chipper forever.
Orange County chipmakers have learned that lesson. In the past 12 months, the 15 largest chipmakers here shrunk their ranks by 18%, or 984 people, to 4,479 local workers. That’s according to this week’s Business Journal list, which ranks chipmakers based or operating here by OC employment.
A year ago, before the chip sector’s downturn was in full swing, local chipmakers posted a 16% gain in jobs.
While OC has been hit hard, chipmakers have cut more employees elsewhere. Companywide employment among the chipmakers on the list declined 19% 32,173 people.
Now local chipmakers are trying to gauge whether the current down cycle has reached bottom and will pick up again next year.
It’s hard to imagine things getting much worse. A look at this year’s list shows that nearly every company underwent some kind of contraction in the past year. Texas Instruments Inc. pulled out of OC altogether, resulting in about 300 layoffs.
Topping the list is Newport Beach-based Conexant Systems Inc., one of the only companies to make chips in OC. Conexant’s local employment fell by 33% to 2,000 people. After a companywide restructuring and two rounds of layoffs, Conexant shifted a portion of its production out of Newport Beach and still plans to sell other facilities in North America.
No. 2 Irvine-based Broadcom Corp. had its own restructuring, albeit a smaller one that resulted in nearly 200 job cuts. Even with the jobs decline, Broadcom posted a 22% gain in OC workers to 970.
But the chipmaker has downshifted from last year’s heady growth. In the past 12 months, Broadcom acquired only four companies compared with 11 in 2000. In all, Broadcom has acquired 20 companies.
Broadcom said it has been busy investing in new research, which company executives hope will pay off when the market rebounds.
“A contraction in the market can play to our advantage over the long term,” Broadcom Chief Executive Henry Nicholas said at the company’s annual meeting this year. “We’re well-positioned for a re-acceleration of the economy.”
Irvine-based Microsemi Corp., OC’s third largest chipmaker by workers, cut its local staff by 23% to 540 people. Microsemi, which is more diversified than other local chipmakers, managed to grow sales 5% to $251 million for the 12 months ended June 30. In October, Microsemi landed a $4.5 million contract to make chips for an undisclosed European military and aerospace company.
Beyond the top three spots, this year’s list is completely different from years past. Dallas-based Texas Instruments ranked No. 6 last year but drops off this year’s list. Aliso Viejo-based QLogic Corp., which ranked No. 4 last year, was taken off as a result of its expanded product line, which includes chips as well as devices and gear for data storage systems. QLogic now is ranked on the Business Journal’s computer hardware makers list.
Those changes put Irvine-based Toshiba America Electronic Components Inc. in the No. 4 spot, up a notch from last year, despite a 26% decline in OC workers.
The shifts also bumped up TDK Semiconductor Corp. from No. 7 last year to No. 5. One of the only companies to grow ranks this year, TDK bolstered employment 26% as the company readies itself for an initial public offering, which could take place next year.
Irvine-based Valence Semiconductor, which kept employment steady, became OC’s sixth largest chipmaker, up from the No. 9 spot last year.
Five companies,four of them startups,debuted on this year’s list.
No. 9 3DSP Corp., which designs digital signal processors, bumped OC employment 113% to 66 people as the Irvine-based company topped $24 million in venture funding for the year.
Y Media Corp., also of Irvine, landed the No. 13 spot on this year’s list. The company upped its headcount by 25% to 40 people. The 2-year-old company designs chips for digital cameras, computers and wireless phones using the same standard process used to make computer processors, memory chips and other common semiconductors. In digital cameras, Y Media is hoping to displace so-called charge-coupled devices, chips that offer high-quality images but are more costly to make.
Upstarts TransDimension Inc. and Morpho Technologies, both of Irvine, and industry veteran SRS Labs Inc. of Santa Ana tied for the No. 14 spot on this year’s list.
For Morpho and TransDimension, the story was a good one. Morpho grew its local ranks some 250% to 25 people, while TransDimension grew from 18 to 35 people locally.
TransDimension, which designs and sells circuit boards known as controllers that are based on the universal serial bus standard, said it had to turn down funding in the past year to keep dilution to a minimum. But venture capitalists give the company high marks.
“The size of the market for devices that can benefit from the company’s products, both current and planned, is very significant,” said Michael A. Rotgin of Venice-based Rolling Oaks Capital Partners LLC.
Rolling Oaks joined Shelter Capital Partners and Alcatel Ventures in TransDimension’s latest round of funding worth $13 million.
SRS Labs, which makes chips for consumer electronics and telecommunication systems, had to cut its local payroll 13% to 40 people. The company has been working to stem its losses in the past year.
No. 17 Intersil Corp. debuted on this year’s list after relocating to Irvine from Palm Bay, Fla. By sales, Intersil is among OC’s larger chipmakers. But the company counts just a small headquarters here. Companywide, Intersil employs 2,930 people, down 3% from a year ago after closing an Ohio plant.
Earlier this year, Intersil, which makes analog communications chips that help cars, computers and networking devices handle a variety of functions, sold its discrete semiconductor division to Fairchild Semiconductor Inter-national Inc. for $338 million. The sale effectively doubled the company’s cash on hand to more than $500 million.
Life after spinning off hasn’t been the best for the Agere Systems Inc., No. 12 on this year’s list. The maker of optoelectronic chips, which was spun off from Lucent Technologies Inc. last year, cut its companywide ranks 27% amid a broad slowdown in optical gear. Still, the company managed to keep OC employment stable at 46 people in Huntington Beach, bumping up its rank a notch from No. 13. n
