Orange County chipmakers, whose local employee count fell about 6% last year, are bracing for additional fallout from the coronavirus that originated in China and continues to spread across the world.
Chipmakers are especially susceptible to tensions in global trade, particularly those affecting China, where much of their manufacturing takes place.
Kurt Busch, chief executive of voice-activated chip startup Syntiant in Irvine, said the coronavirus spread shows the importance of China in the global production supply chain.
“If this continues for a long time, it would disrupt a lot of industries … most industries actually,” Busch said.
He emphasized that after an almost two-month slowdown in China due to the virus, partners and customers are starting to go back to work now outside the Wuhan focal point.
Busch said overall “things are great” for his 3-year-old company, with its first product in production as “orders are starting to come in.”
‘Good Spot’
Broadcom Inc. (Nasdaq: AVGO), Tower Semiconductor Ltd. (Nasdaq: TSEM) and Skyworks Solutions Inc. (Nasdaq: SWKS) held onto their Top 3 slots among OC’s leading chipmakers, according to the latest Business Journal rankings.
Syntiant moved up two places to No. 12 on the list, which ranks the firms by local workers.
Busch sees Orange County as a “good spot to do chip startups” with plenty of local talent.
Even before last week’s massive market sell-off, companies were attuned to risks posed by the virus that’s threatening to turn into a global pandemic.
“We are in close contact with our exceptional Chinese sales force, and design and application support teams, as well as with our China-based customers,” Tower Semiconductor Chief Executive Russell Ellwanger told financial analysts in a Feb. 18 conference call. “We are doing all within our power to help and to support.”
Ellwanger, whose company last week changed its name from TowerJazz, saw “no impact in our supply chain” with a “small reduction” in first-quarter activities “of about $3 million to $5 million revenue impact.” The company’s headquarters are in Israel.
Cuts at Largest Chipmaker
Broadcom in Irvine has long been OC’s largest chipmaker, though the current local base is estimated to have fallen almost another 10% to 1,470 over the past year, following recent moves by the company to sublease out a nearly 60,000-square-foot portion of its Irvine campus.
The company’s $37 billion sale to Avago Technologies Inc. closed in 2016, ending the Irvine chipmaker’s 20-year history as a locally based company. The combined entity is now headquartered in San Jose.
Broadcom’s estimated local employee count is down some 40% in the four years following the sale to Avago.
Broadcom sells semiconductors and infrastructure software for data centers, networking, storage solutions, and the broadband, wireless, and industrial markets. The chipmaker will report first-quarter results next Thursday, March 12.
The company is seeking a buyer for its radio-frequency wireless chip unit, which could be valued at $10 billion, the Wall Street Journal reported in December.
A sale “would accelerate the company’s shift away from its roots as a semiconductor maker,” the WSJ said. It cautioned the process is at an early stage; a deal may still fall through.
Apple (Nasdaq: AAPL), which recently warned of the negative impact on results from the coronavirus, accounted for about 20% of Broadcom’s net revenue in fiscal year 2019. Broadcom chips are used in iPhones, iPads and other Apple products.
Skyworks Solutions, headed by Chief Executive Liam Griffin, said it got 51% of its net revenue from Apple in fiscal year 2019. Some news outlets listed Skyworks as the firm with the greatest exposure to China among the U.S. major chipmakers. Skyworks’ headcount inched up by a scant three people to 447 in its Irvine offices, where Griffin and most executives are based.
Marvell Semiconductor
Unchanged in fourth place on this year’s list of OC’s largest chipmakers was Marvell Semiconductor Inc. of Irvine. Though it trimmed its workforce by almost a quarter from about 350 to an estimated 266, which reflects permanent layoffs in OC, additional jobs were cut elsewhere in the state.
“Marvell makes organizational changes to our global workforce on an ongoing basis,” company Public Relations Senior Manager Kristin Hehir said in an email. “These updates focus on rebalancing our organization to match the current business outlook for our core markets and future success.”
Microchip Technology Inc., with headquarters in Chandler, Ariz., was also unchanged, at No. 5 on the list, despite cutting its Lake Forest workforce from 210 to 189. It bought Aliso Viejo’s Microsemi a few years ago and has since made a few rounds of cuts.
Of the top 14 chipmakers on the Business Journal list, three have their corporate headquarters here.
