Laguna Niguel-based chip startup Symwave Inc., said on Monday it was acquired by one of its backers, Hauppauge, N.Y.-based Standard Microsystems Corp., for undisclosed terms.
Last year, Standard Microsystems Corp. took a stake in Symwave with an initial $5 million investment.
The investment came with an option for Standard Microsystems to acquire Symwave if certain conditions are met.
In the past year, Standard Microsystems has tacked on an additional $3 million in financing.
Standard Microsysems’ Chief Executive Christine King also landed a seat on Symwave’s board.
Symwave, which got off the ground in 2008, makes chips for the next generation of universal serial bus ports, the most popular way of connecting consumer electronics to a PC.
The latest version of the ports, USB 3.0, transfers data about 10 times faster than previous versions.
Symwave’s chips, which went into full production late last year, are geared toward portable external disk drives.
The company has made quick work of its technology, snagging roughly 80% of the market for USB 3.0 chips for devices that link to PCs, according to Chief Executive Yossi Cohen.
Its biggest customer is Lake Forest-based disk drive maker Western Digital Corp., which has a sizeable lineup of external storage drives that it markets to consumers as a way to store photos, music and other files.
Other customers include Western Digital’s top rival, Scotts Valley-based Seagate Technology LLC, France’s LaCie Group SA and Hitachi Global Storage Technologies Ltd., a unit of Japan’s Hitachi Ltd.
Symwave said it’s looking for fourth-quarter revenue of about $10 million. A year earlier, it had about $200,000 in sales.
The biggest reason Symwave was looking for a buyer was a lack of financing to expand, according to Cohen.
“Standard Microsystems has been a strong supporter of Symwave during some of the most challenging financial times in the history of our industry, and their backing enabled us to complete the product development and ramp our customers to production successfully,” Cohen said. “We are pleased to see a successful outcome.”
The company needs to grow quickly to produce enough chips to meet demand, he said.
Symwave, which was started in 2001, is in some ways a spinoff of a spinoff.
Its founders, a handful of engineers and executives, hail from Newport Beach-based Conexant Systems Inc., which spun off from Rockwell International Corp. in 1999.
The company floundered for awhile with a technology that was being phased out in favor of USB.
Cohen left an executive post at Broadcom in 2008 and took a critical eye to Symwave’s chip lineup.
He also moved the company from San Diego to Orange County and opened a large development center in China.
Before Cohen came on board, Symwave’s primary business was designing chips for FireWire, a port for linking camcorders and other devices to a computer for quickly transferring data.
Cohen decided to stop investing in FireWire and look for growth in USB 3.0.
A potential Symwave buyout coincides with USB 3.0 hitting the mass market.
The transition from USB 2.0 to USB 3.0 is expected to happen by the end of the year, with many big tech product makers onboard.
Symwave’s chips are “backward compatible,” meaning they still can work and deliver some speed benefits for devices with USB 2.0.
It’s unclear what’s set to happen to Symwave’s local office. It has some 30 workers here and other 60 in San Diego and Shenzhen, China.
Publicly traded Standard Microsystems sees about $370 million in yearly sales and had a recent market value of $600 million.
