Chipmakers’ spending on gear to make their products is likely to slow in 2008, according to a recent report.
Spending on semiconductor equipment worldwide is forecasted to total about $40 billion this year, down nearly 10% from 2007’s $45 million, according to Stamford, Conn.-based market researcher Gartner Inc.
The biggest drop in spending comes from companies that make memory chips.
Fountain Valley’s Kingston Technology Co., the top maker of memory products, buys chips from big manufacturers in Asia and assembles them on circuit boards that go into computers and other storage gear.
Kingston and other companies that make memory devices were hit hard in the first half of 2007 after a steep drop in the price of memory chips.
Falling prices caused a glut in the market and chipped away at the value of inventories.
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SimpleTech’s portable flash drive: Ferrari designer chose look, color |
The second half of 2007 brought some relief as prices stabilized. But many companies are still wading through oversupplies, according to the report.
Because they overspent last year, a lot of companies are expected to pull back in 2008, said Klaus Rinnen, managing vice president for Gartner’s chip manufacturing group.
“We expect the long overdue capital spending correction in the (memory) market to push the capital equipment market into contraction,” he said in a statement.
Concerns about the economy also will weigh in on capital spending.
One bright spot is in flash memory, the report showed.
Companies are buying more flash to keep up with demand for memory sticks for cell phones and digital cameras, digital music players and portable storage devices.
Kingston, which was a latecomer to the flash market, saw more than $1 billion in sales of flash this year,roughly a quarter of its $4 billion in 2007 revenue.
Spokesman David Leong said, “mobile, especially, is taking off and as the availability of multimedia content and the appetite for more content increases, Kingston is poised to meet those demands.”
But the report doesn’t see the uptick in spending on flash will be enough to cancel out the drop in dynamic random access memory, known as DRAM.
“Despite an increase in flash spending, the sharp decline in DRAM-related spending will hit hard at equipment companies with a high level of exposure to the memory market,” Rinnen said. “The recovery should begin in the second half of the year as DRAM supply and demand comes into balance.”
Reseller Combo
Laguna Hills-based Blytheco LLC, the top reseller of business software made by Irvine’s Sage Software Inc., bought one of its competitors.
Privately held Blytheco bought a small Irvine-based outfit called Integrated Tech Inc.
Terms of the deal, which was done in cash and in stock, weren’t disclosed.
Both are resellers of Sage’s software that help small businesses manage and automate human resources, accounting and other back-office tasks.
The companies provide service, training and support for Sage customers and also write programs that tweak the software to fit specific company needs.
The deal “is a natural expansion of the already successful partnership that both firms have enjoyed for years,” said Chief Executive Stephen Blythe, who started Blytheco in 1980. “This is the first step in a series of planned combinations that will create a national Sage Software business partner.”
Blytheco saw about $21 million in sales last year, he said. Integrated Tech had sales of about $1.5 million in 2007, he said.
The company’s goal is to grow revenue to about $50 million and have 10 regional offices.
Integrated Tech has a dozen workers locally and at an office in Denver.
The Irvine workers are set to move to Blytheco’s Laguna Hills offices in a few months, Blythe said.
Blytheco has about 75 workers there.
The Sage software reseller market is peppered with a lot of small players that are ripe for consolidation, Blythe said.
“We are seeing a great opportunity to consolidate some of the good resellers that have been around for 10 or 15 years but haven’t had the resources to invest back into their business and grow to the next level,” he said.
Auto Designer Tapped for Tech
SimpleTech, a maker of flash memory products for consumers and a former unit of Santa Ana’s Stec Inc., is taking some design cues from an Italian firm best known for creating the look and feel of luxury cars made by Ferrari, Maserati, Cadillac and Jaguar.
San Mateo-based Fabrik Inc., which paid $43 million for Stec’s consumer division and brand name a year ago, hired Italy’s Pininfarina SPA to design its SimpleTech line of portable external storage devices.
Pininfarina chose a typical Italian theme for the product line: food.
The portable flash drives come in colors that correspond to fruits and other flavors, such as blueberry, black cherry, cool mint, kiwi, marshmallow, bubblegum and espresso.
The drives have a sleek, low-profile casing that resemble,you guessed it,the body of a sports car.
Privately held Fabrik, which has operations in Santa Ana, launched the line at the International Consumer Electronics Show in Las Vegas last week.
