The Inevitable: Broadcom Surpasses Conexant
By ANDREW SIMON
It finally happened.
Newport Beach-based Conexant Systems Inc., which held the title as largest chipmaker in Orange County for years, has been eclipsed, according to this week’s Business Journal list of the largest chipmakers in OC.
Conexant fell from the top of the heap last year to No. 4, while Irvine rival Broadcom Corp. jumped to the top spot from No. 2 last year.
In the past two years, Conexant has shed four businesses and hundreds of workers. The changes led to the debut of three new companies on the list last year and one this year, No. 6 Mindspeed Technologies Inc. of Newport Beach.
To get an idea of how big Conexant once was: Jazz Semiconductor Inc., Conexant’s former chip plant in Newport Beach, is the No. 3 chipmaker here, bigger than its former parent.
The Irvine office of Woburn, Mass.-based Skyworks Solutions Inc., formerly Conex-ant’s wireless business, came in at No. 5 on the list.
In fact, Conexant and its offshoots made up four of the top six companies on this year’s list, which ranks chipmakers based in OC or those with facilities here by employment.
Thanks to changing fortunes in the chip market and a continuing expansion of products, Broadcom easily grabbed the top spot, edging its OC worker count up by 49 people, or 5%, to 1,049.
That comes as Broadcom’s companywide headcount declined 11% to 2,733 people in the past year, thanks to some division closures.
“Broadcom has shown tremendous growth in its emerging businesses,” said Lehman Brothers analyst Arnab Chanda.
No. 2 Irvine-based Microsemi Corp., a maker of analog chips for use in satellites, airplanes, handheld electronics and other devices, also advanced on this year’s list, thanks to Conexant’s restructuring. Long OC’s No. 3 chipmaker after Conexant and Broadcom, Microsemi counted 800 OC workers, unchanged from a year ago.
But Microsemi shouldn’t get too comfortable in its new spot. Two weeks ago, the company said it planned to shutter its plant in Santa Ana and combine it with a plant in Garden Grove. That will result in about 300 layoffs, which would drop the company down to the No. 6 spot.
“It’s just a part of our capacity maximization effort,” Microsemi Chief Executive Jim Peterson said.
Under Conexant, No. 3 Jazz Semiconductor was seen as a liability. Conexant tried to cut as many costs from its facility as it could.
Not any more.
Jazz bumped its worker count up 9% to 730 in the past year. Jazz recently invested $90 million in a China-based chipmaking venture. Jazz hopes to establish a foothold in the Chinese market.
Conexant dropped to No. 4 spot after shaving half its workers, largely in the spinoff of Mindspeed. Conexant now counts 650 OC workers.
After a long restructuring, Conexant is sounding more bullish. Conexant Chief Executive Dwight Decker recently told an industry trade magazine he’s looking to take on Broadcom and others in the chip market for high-speed modems, set-top boxes and other devices.
“I’m particularly excited because we see ourselves competing with Broadcom or TI or STMicroelectronics,” Decker said. “It might turn out over the next couple of years that there’s a lot of interest in exactly the kind of market that Conexant plans to focus on.”
No. 7 Toshiba America Electronic Components Inc. dropped from No. 6 to No. 7 after the company,a division of Japan’s Toshiba Corp.,cut employment by 16% to 151 employees in Irvine.
A new name on this year’s list is that of No. 11 ESS Technology Inc. of Fremont. The company debuts on this year’s list after acquiring Pictos Technology Inc., the former digital imaging division of Conexant and No. 8 on last year’s list.
No. 8 TDK Semiconductor Corp., a U.S.-based unit of Japan’s TDK Corp., dropped one space after the company cut 20 people, or 17%, for a total of 95 OC workers.
Earlier this year, TDK moved its headquarters from Tustin to a smaller Irvine Spectrum space. The move came after the chipmaker shuttered its production and test operations and shifted work to Asian contractors.
“We moved all our production and final test functions,” said Jerry Fitch, TDK Semiconductor’s chief financial officer, in an earlier interview. “It’s a pretty efficient model. We get better execution out of it.”
No. 11 Foothill Ranch-based Aristos Logic Corp. debuted on this year’s list. The chip designer, which grew out of Western Digital Corp. in 2000, raised $20 million in funding earlier this year. That round brought Aristos’ total raised to $53.5 million.
Aristos designs chips that speed the flow of data over storage networks,groups of computers used by banks, Internet companies, retailers and government agencies to store and retrieve data.
Another newcomer on this year’s list: No. 14 Irvine-based SolarFlare Communications Inc., which closed on a $17.5 million second round of funding earlier this year. Intel Corp. is among SolarFlare’s investors.
SolarFlare makes chips that allow existing networking gear to work with newer, faster devices. All of SolarFlare’s management team hails from PairGain Technologies Inc., the former Tustin-based company that’s now part of ADC Telecommunication Inc.
Overall job losses at the county’s largest chipmakers moderated in the past year. Factoring in Conexant’s shift of jobs to Mindspeed, the 19 companies on the list saw employment fall 3% to 4,881 people in the past year. Last year’s group posted a 12% employment decline. Compared to the companies on last year’s list, this year’s group saw a 5% decline in jobs.