Semicoa Corp. nearly cashed in its chips after Microsemi Corp. acquired it and initiated a series of cost-cutting measures that left the company on the verge of extinction four years ago.
The once-promising defense contractor was down to a few employees at its headquarters from a peak of about 200 companywide. It 47,000-square-foot space in Costa Mesa bore the added indignity of a leaky roof.
Today the chipmaker is showing signs of renewed vigor and getting into some new commercial applications for its line of bi-polar transistors long used by the military.
“In the last 12 months we’ve expanded greatly,” Chief Executive Ramesh Ramchandani said.
Ramchandani was promoted from executive vice president and general manager last year after leading de-velopment of some new products, a strategy he’s been successful with in the past.
He grew a $90 million business line of transistors used for amplifying or switching electronic signals to $340 million in annual sales during a four year stint as general manager of Phoenix-based chipmaker On Semiconduc-tor Inc. The turnaround involved consolidating factories, pushing higher-margin products and inking a manufacturing deal with South Korea chip foundry Hynix Semiconductor Inc.
The business line grew to a third of On’s annual revenue by 2004.
He’s hoping to recreate that blueprint with Semicoa, which has a 42-year history in Orange County.
Sales
Semicoa saw sales top $35 million at its peak, with almost 200 employees. Its chips needed to perform under extreme conditions and were used by defense contractors including Northrop Grumman Corp., Lockheed Martin Corp., Boeing Co., Raytheon Co., General Dynamics Corp. and Honeywell International Inc.
Aliso Viejo-based competitor Microsemi acquired the company in 2008 for $25 million. It then shut down its factories, stripped down the assets and laid off nearly every employee, Ramchandani said.
Concerns
It wasn’t long before the Justice Depart-ment raised monopoly concerns. The government argued that Microsemi had a monopoly on the niche business it acquired in the Semicoa deal.
Microsemi struck a deal in August 2009 to divest the business rather than face antitrust lawsuits. It sold off the remnants of Semicoa for an undisclosed sum to Los Angeles-based private equity firm Vance Street Capital LLC.
Vance Street gave Semicoa a capital infusion, and in early 2010 the company rehired about 90% of its workforce back. It brought back former chief executive for a stint right after the deal, and later elevated Ramchandani to the top post.
The privately held company doesn’t disclose financial data, but indicators point to sales nearing their all-time highs, and the company is believed to be back to profitability. It’s back up to some 120 employees and counts more than 650 customers as it eyes new growth markets.
Its technology has largely remained the same since its inception, which made the comeback a little easier.
Semicoa launched a new set of products geared for the defense, industrial and aerospace industries about a year ago.
The company’s products are in the process of receiving certification from the Defense Logistics Agency, which controls spare parts and component procurements for the military.
Transistors
Semicoa launched its first set of transistors for the commercial market in March. The chips are used to control power management in solar systems, hard-disk drives, clean technology and other energy efficient systems.
The company designs its chips in Costa Mesa and outsources manufacturing to Tow-erjazz Semiconductor Inc. in Newport Beach. Final assembly and testing is handled back at Semicoa’s headquarters.
It’s one of the few local chipmakers here that complete its entire product cycle within county lines.
“We started out with a paper idea,” Ramchandani said. “Today we have 100 products in the market.”
