SMC Networks Inc., a networking products maker that’s part of Taiwan’s Accton Technology Corp., is expanding in the Irvine Spectrum.
The company recently signed a new lease for 33,400 square feet of space at 38 Tesla in the Spectrum. SMC currently occupies 20,000 square feet in another part of the Spectrum.
SMC is moving because it has “people sitting on top of each other,” according to Sean Keohane, the company’s president.
“We have been hiring over the past year,” Keohane said. “Actually, we’ve doubled our head count. We have 120 in Irvine where we had 55 to 60 a year ago.”
Keohane declined to disclose SMC’s sales but said revenue is up 65% from a year ago as demand for easy-to-use networking gear among small to midsize businesses remained stable and consumer sales climbed.
SMC sells gear that eases the process of setting up basic computer networks. Customers can buy small networking boxes and plug in computer products to link them together.
The segment hasn’t been hit as hard as larger networking markets, where a slowdown in corporate spending and a resulting inventory crunch has befallen big names such as Cisco Systems Inc. and Nortel Networks Corp.
“It’s a little more fluid here,” Keohane said. “We’re serving the broadband markets, and that’s really driving consumer demand for home networking. Our business is pretty healthy.”
But the competition is stiff, and a good part of it is in Orange County. SMC has 2.5% of the low-end router market, while Irvine-based D-Link Systems Inc. has 2.4%, according to market tracker NPD Intellect. The Linksys Group Inc., also of Irvine, has a dominant 57% share.
Linksys made headlines in May when it struck a deal to supply Internet telephony company Net2Phone Inc. with a device that allows users to make local and long-distance calls from anywhere there is a broadband Internet connection. More recently, Linksys struck another deal with Verizon Communications Inc. to include its router in Verizon’s digital subscriber line subscriber package (see related item, page 64).
But SMC faces other challenges, including falling personal computer sales. Sales of SMC’s networking products depend in part on sales of newer, faster computers. The company could see a decline if the PC market doesn’t pick up.
But SMC isn’t concerned yet. The company chose its new space with growth in mind. The new facility will have a large warehouse along with a tech support lab, test facilities and office space. SMC also has smaller operations in Long Beach, Taiwan and Europe.
“This facility is built for expansion,” Keohane said.
The company has a sales meeting planned for next month to hash out projections and growth plans, Keohane said. More decisions on hiring are expected around that time, he said.
SMC even reported strong sales in the weeks following the Sept. 11 terrorist attacks, according to Keohane.
“At this point in time, it looks like things are holding up,” he said.
Parent company Accton Technology of Hsinchu, Taiwan, reported $269 million in first-half sales, a 77% increase. Profits surged 122% to $22 million, the company said.
Despite the strong growth, Accton said it remains “cautiously optimistic” for the rest of the year.
“However, the company predicts an overall increase in gross revenue as sales to the U.S. continue to increase with new customers and market acceptance,” Accton officials said. n
