Chip Sales Turn Sluggish for Silicon Systems

Despite Silicon System’s hefty 53% increase in first-quarter net income and a 74% rise in revenue, the Tustin maker of computer chips has implemented cost control measures in the face of a slowing sales pace and “uncertain economic conditions.”

“Some (general) expansion plans are being looked at a second time,” said company spokesman Larry Pepper, as Silicon Systems executives look at all expenses with “greater scrutiny.”

“We are taking that position so that we don’t run into any hidden” economic problems, he said.

In a statement, Carmelo J. Santoro, company president, said although year-to-year gains have been and are expected remain strong, quarter-to-quarter growth has slowed. Net sales for the first quarter dropped 53% to $7.4 million from $15.8 million in the previous quarter.

Santoro attributed the drop to greater numbers of customers canceling or delaying their orders as “excessive personal computer and peripheral equipment inventories” build up.

During the first quarter, ended Dec. 29, Silicon Systems, buoyed by the popularity of its specialized computer chips, posted a profit of $1.6 million, compared to $1.1 million the year before.

Quarterly revenues rose to $16.4 million from $9.5 million the year before. The company’s products “have found excellent acceptance in the marketplace,” said Pepper.

Silicon Systems anticipates introducing about 40 new products during fiscal 1985, Pepper said. The company specializes in the design of custom computer chips for the telecommunication and computer peripheral markets.