Supplies Dry Up for Penta : Electron tubes: The Chatsworth firm turns to China, Czechoslovakia and Yugoslavia for the old-fashioned but still popular power devices.

Penta Laboratories Inc. is a little company with a big problem. For more than 40 years, the Chatsworth-based firm has made its business buying surplus electron tubes from the military and other sources, and selling the tubes to makers of everything from television sets to guided missiles.

Electron tubes control the flow of power in electronic equipment using technology that has been around for about 80 years. Even though newer technology has replaced electron tubes in some products, Penta says that demand for tubes still exists--including as replacement parts for older equipment used in Third World countries, and for high-power applications such as broadcast transmitters.

But for the past several years, electron tube supplies have been drying up in the United States. “It’s bizarre,” said Gary F. Madvin, Penta’s chairman. “As a small company, we have this whole worldwide market open to us that’s there for the taking.”

Despite the difficulties finding supplies, Madvin estimated that Penta’s revenues would double from last year to $6 million in 1992, and would reach at least $10 million next year.

That is, if the company can find enough supplies. Madvin, 55, a former insurance and real estate executive who joined Penta in 1990, conceded that the company’s biggest challenge is to find new sources of supply.

Part of the problem is that big domestic manufacturers such as General Electric Co. stopped making electron tubes, in part because the tubes were being replaced in newer products by solid state devices and semiconductors. Surplus electron tube supplies held by the U. S. military and private industry have also been diminishing.

Meanwhile, Penta’s main competitor, Richardson Electronics Ltd. in LaFox, Ill., which is about 25 times the size of Penta, had been locking up remaining electron tube supplies in the United States. Richardson gobbled up small tube manufacturers, and until recently it was the exclusive distributor for the world’s biggest electron tube manufacturer, Varian Associates Inc.

To try to solve its supply problem, Penta has established relationships with manufacturers in China, where electron tube-making is still a large industry. Penta now imports more than 20% of its inventory from that country.

Penta has a deal pending to acquire an interest in a Czechoslovakian electron tube plant, and has been attempting to buy supplies from Yugoslavia and its former republics. It is also hoping to find a small U. S. electron tube manufacturer that it can acquire.

But all these roads have potential hazards. Business deals in China are precarious because of the uncertain political climate and trade status. Penta’s agreement to buy part of a Czech plant was put on hold by the dissolution of that country, and the bloody war among the former Yugoslav republics has held up shipments. Penta’s search for a U. S. manufacturer to acquire has so far been fruitless.

Penta says its biggest customers currently include defense contractors Litton Industries Inc. and Raytheon Co., the U. S. Air Force and several foreign governments including France, Turkey, Greece, Japan, Brazil and Pakistan. Foreign markets now account for about one-third of Penta’s sales, but the company hopes to increase that share to 50%.

“Say you have a broadcasting station in Seattle that gets new equipment,” Madvin said. “The old equipment doesn’t get thrown away, it’s sent to Peru. When they get new equipment in Peru, it’s sent to Africa. It just keeps going, and the tubes follow.”

Electron tubes are currently used in thousands of different kinds of equipment, including radios, microwave ovens, medical imaging machines and radar equipment.

Penta currently stocks more than 6,000 different types of electron tubes, from thumb-size glass and metal devices to all-metal tubes as big as a car engine. Prices range from $3 apiece to more than $100,000.

But long term, Penta faces another problem as electron tubes are increasingly replaced by newer technologies.

In the United States, the rapid growth of semiconductors has resulted in sales of electron tubes remaining flat at about $2.5 billion for the past four years, said Dean McCarron, vice president of technology at In-Stat, a Scottsdale, Ariz., market research firm for the electronics industry.

McCarron expects that the domestic market for electron tubes will hold steady or even grow slowly over the next few years because the tubes are still the preferred technology for display equipment--such as televisions--and for large power output needs. “When you deal with megawatts of power, you just can’t do it with semiconductors,” he said.

The foreign market for electron tubes is showing stronger growth. Foreign sales by U. S. tube manufacturers increased to $655 million in 1991 from $545 million in 1990, according to the Electronic Industries Assn., a Washington-based trade group.

But Mark Rosenker, an EIA spokesman, warned that ultimately the total worldwide market for electron tubes will erode as newer technologies take hold. “Solid state will replace many of the tubes,” he said.

Madvin acknowledges that for some products the need for electron tubes will eventually diminish. But he said that some equipment, such as broadcast equipment that handles large amounts of power, are still best served by electron tubes.

And Edward J. Richardson, chairman and chief executive of Richardson Electronics, said, “There are certain areas of the business that will be a replacement market for years and years.”

Penta--formerly Aero Electronics--was started by Benjamin Sannett, who noticed that unused electron tubes were being sold by the military at the end of World War II. He ran the business until his death in 1976, after which his sons, Steven and Richard, took over management of the company.

Steve Sannett, 40, is currently Penta’s president and majority owner. Richard Sannett, 37, is vice president of domestic sales; he and Madvin are Penta’s remaining stockholders.

Penta also hopes to land some additional business because of Richardson Electronics’ settlement a year ago of criminal and civil antitrust charges.

In settling thS. Justice Department charges, Richardson and Varian each agreed to pay $2 million in fines and compensation. The government had accused the two companies of attempting to control the market for power-grid tubes--a type of electron tube--by collecting used tubes to prevent other firms from rebuilding the tubes and selling them. It also charged Richardson and Varian with eliminating competition by acquiring other tube manufacturers and distributors through a partnership.

The settlement called for Richardson and Varian to dissolve their partnership, and barred Varian from continuing to grant Richardson exclusive distribution rights.