Forget Corporate America. Consumers and gadgets are expected to spur technology sales in 2006.
Semiconductors, a key sector in Orange County, could grow even faster than the overall tech industry next year, market watchers say.
Corporate technology spending is projected to grow 5.5% in 2006, up from 3.5% growth this year, according to Gartner Inc.
Global chip sales are seen growing 8% to $246 billion, according to the San Jose-based Semicon-ductor Industry Association.
For 2005, chip sales are seen coming in 7% higher at $227.6 billion.
“We’re looking forward to 2006,” Bill Ruehle, Broadcom Corp.’s chief financial officer, said at November’s UBS Global Communications Conference in New York.
The Irvine chipmaker is looking at “a dozen or so growth areas for 2006,” Ruehle said. “There is no shortage of things to do.”
Among them: chips for satellite and cable TV boxes, high-speed modems, Internet phone calling, wireless networking and handheld devices such as Apple Computer Inc.’s video iPod.
Consumer electronics are playing a bigger role for Broadcom and other companies, including Lake Forest-based Western Digital Corp. and Newport Beach’s Conexant Systems Inc.
“The main difference between now and the 1990s is that the largest single segment then was corporate IT,” said John Greenagel, a spokesman for the chip association. “Now, it’s really consumers.”
Corporate America has been more interested in stability and calculated tech buying for the past couple of years.
Aliso Viejo-based Centon Electronics Inc., a longtime seller of computer memory products, has seen newer consumer devices grow to nearly a third of its $115 million in 2005 sales, Chief Executive Gene Miscione said.
Three years ago, gadgets made up less than 5% of sales.
Centon in the past year came out with digital music players sold in stores of Dallas-based CompUSA Inc.
“We see it as an active market,” Mis-cione said. “The demand is there.”
The computer sector could face tougher times as profits are squeezed amid competition, according to Gartner.
Computer shipments could grow by 8% annually next year through 2009.
But revenue is set to stay flat.
That stands to make the task of turning around Irvine’s Gateway Inc. tougher.
The computer maker is on a comeback that saw a return to profitability in summer. Analysts expect the company to boost its earnings by about 40% next year.
Much of Gateway’s profits have come from heavy cost cutting by Chief Exec-utive Wayne Inouye. Now the focus is on growing sales.
Next year, analyst see Gateway’s sales rising 10% to $4.3 billion.
Gateway,a relatively small player competing with Hew-lett-Packard Co. and Dell Inc.,is an oft-cited takeover target.
The talk has heated up of late, spurred in part by the growth plans of Asian computer makers.
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COMPANY TO WATCH: BITFONE CORP.
Laguna Niguel-based Bitfone Corp. has a couple of things going for it: a lot of funding and a hot product.
The software maker could be on tap for something big in 2006,more investment, new customers, or maybe an acquisition or even a public offering.
This year, Bitfone landed an undisclosed investment from Qualcomm Inc.
Chief Executive Gene Wang said he’s open to an acquisition but said he would like to take Bitfone public.
The company makes software that allows wireless service providers to send fixes to a user’s phone via their networks.
,Brian Womack
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PERSON TO WATCH: DWIGHT DECKER
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Decker: working on turnaround; Jazz IPO? |
Longtime Orange County technology executive Dwight Decker goes into 2006 with some unfinished business.
First up: building on a recovery at Newport Beach-based chipmaker Conexant Systems Inc.
For the past year, Decker has guided Conexant through a quick turnaround plan that has included beefing up India operations and cutting costs.
Conexant returned to profitability a couple of months ahead of schedule in October.
Now Decker says he wants nothing less than double-digit core operating margins by the end of 2006.
That would match the margins Conexant posted before its downturn.
Decker came out of semiretirement late last year to fix a company that had sunk deep into red ink following a difficult combination with Red Bank, N.J.-based GlobespanVirata Inc.
Conexant starts the new year with some design wins for its chips from The Direct TV Group Inc. in El Segundo, the satellite TV market leader.
The company is making headway in its sales of chips that let consumers use the Internet to make phone calls.
Decker’s other loose end: Jazz Semiconductor Inc.
The Newport Beach chip plant operator broke off from Conexant in 2003 and was set to go public this year. Decker said the offering isn’t dead and could happen this year. Conexant still owns a chunk of Jazz.
,Brian Womack
