Santa Ana-based Microsemi Corp. is looking to build on last year’s $24 million acquisition of LinFinity Microelectronics Inc. with a $5 million expansion of the LinFinity plant in Garden Grove, where it plans to hire an additional 45 people.
Microsemi plans to beef up production of silicon wafers,the material from which chips are made,from 2,800 to 3,800 a week. Microsemi is looking to use the additional wafers to boost chip production at another subsidiary, Microwave Products Inc., which now includes the business of Narda Microwave Semiconductor that Microsemi bought last year for $5 million.
“It’s a dual bet,” said David R. Sonksen, Microsemi’s chief financial officer and vice president of finance. Microsemi, a maker of chips and other electronics, acquired Garden Grove-based LinFinity from San Jose-based Symmetricom Inc. LinFinity is one of the county’s older electronics businesses, and operates one of just a handful of wafer fabrication plants here.
Microsemi, which had sales of $66 million in the quarter ended July 2, hopes to realize $75 million to $100 million in additional yearly sales from its LinFinity and Microwave Products units after the Garden Grove expansion, which will be completed in about a year.
If Microsemi pulls it off, it will extend a torrid pace of growth for the one-time military supplier. For the company’s fiscal year ending Sept. 30, analysts are projecting $245 million in revenue, up from $185 million in the prior year.
Like other chip makers, Microsemi has seen its shares surge this year, going from about 10 in January to around 40 last week. On the day the Garden Grove expansion was announced, Microsemi’s stock dropped from 42 to nearly 37, in tandem with a downturn in the chip sector sparked by an analyst’s downgrading of Intel Corp. By week’s end, the stock was moving up again.
Analyst Christopher Chaney of AG Edwards predicted the semiconductor sector will grow anywhere from 32% to 40% next year. He cited Microsemi and five other semiconductor manufacturers as among his favorites.
“We believe those semiconductor markets that have experienced the greatest sales growth in 2000 will continue to see above-average growth in 2001,” he said. “The world economy, especially the Asia-Pacific, is considerably more healthy than it has been over the past several years. As a result, the sector is experiencing record unit demand.”
Microsemi is a designer, manufacturer and marketer of analog, mixed-signal and discrete semiconductors. The company’s chips manage and regulate power, protect against voltage spikes and transmit, receive and amplify signals. Microsemi products are found in everything from cellular phones and computer monitors to satellites and Patriot missiles.
Microsemi, founded in 1959, is an old-tier military supplier. But it has been reducing its reliance on military customers, who now account for about 30% of its business compared with 75% five years ago.
It’s also been shedding its less-profitable units. In June, Microsemi sold its Micro Commercial Components Division. The unit, a seller of commodity commercial products, was an early part of the company’s strategy to transform itself from a military and aerospace semiconductor manufacturer to a supplier of commercial components. n
